Are Foreign Donors Good Monitors?

European Accounting Review, Forthcoming

Rotman School of Management Working Paper No. 3853884

45 Pages Posted: 28 May 2021

See all articles by Hsihui Chang

Hsihui Chang

Drexel University

Erica Harris

Florida International University (FIU) - School of Accounting

Shushu Jiang

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN)

Zhiming Ma

Peking University - Guanghua School of Management

Date Written: May 15, 2021

Abstract

This paper examines whether and how foreign institutional donors play a monitoring role in the nonprofit sector. By analyzing 2,567 Chinese nonprofit foundations from 2005 to 2014, we find that foundations with foreign institutional donors are associated with higher quality reporting. The effect is more pronounced for nonprofit foundations without established monitors in the form of large domestic donors, sophisticated donors, or national government oversight. These findings suggest that foreign institutional donors are indeed good monitors. Our results are robust to a myriad of alternative specifications and make important first steps in understanding the impact of foreign institutional donors in international giving, especially in developing countries.

Keywords: Nonprofits, foreign institutional donors, financial reporting, China

JEL Classification: L30, L31, M40, M41, M42, M48

Suggested Citation

Chang, Hsihui and Harris, Erica and Jiang, Shushu and Ma, Zhiming, Are Foreign Donors Good Monitors? (May 15, 2021). European Accounting Review, Forthcoming, Rotman School of Management Working Paper No. 3853884, Available at SSRN: https://ssrn.com/abstract=3853884

Hsihui Chang

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

Erica Harris (Contact Author)

Florida International University (FIU) - School of Accounting ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Shushu Jiang

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN) ( email )

Singapore

Zhiming Ma

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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