The Impact Of Financial Information Transparency On Donations To Charitable Foundations

In recent years, the charitable foundation in our country has already ushered in a period of great development,and its number increases year by year. Recurring charity scandals in recent years have made charitable foundations’ credibility suffered serious challenge.Because of this, many of the public do not want to further their contributions, leading to a serious decline in the donation of some foundations.So in order to provide effective suggestions to add charitable foundations’ donations, exploring the influencing factors of endowment income is of great significance to the development of the foundation.Financial information is one of the major part of all the information that the philanthropic foundation must disclose.It can reflect the business of the charity, the utilization of the donation resource and the completion of the charity’s missions.It is important to the donors, beneficiaries and other related interest groups.When many donors are making donation decisions,they will make financial information as an important reference.Whether the financial information transparency affects charitable foundations’ donation revenue, whether this effect is positive or negative, whether organizations can increase their income by improving financial transparency, these problems are worthy to be discussed.This thesis first briefly reviews relevant literatures to get a better knowledge about the current research situation which including the relevant research about financial information transparency, the factors that affecting donation income and the relationship between financial information transparency and donation income,and do a brief summary to raise the main point of the thesis.The thesis then combs the definitions of charitable foundations, donation and financial information transparency, and reveals the influencing mechanism of financial information transparency on donation income by analyzing the principal-agent theory, asymmetric information theory and signal transmission theory. Again,this paper designs quantitative evaluation index system to measure the financial information transparency of charitable foundations.The index system mainly includes the quality of financial information disclosure and the quality of financial information.The quality of financial information disclosure includes three indicators of integrity,timeliness and availability,relevance and faithful representation are the other two indicators that measure the quality of financial information.Finally, this paper empirically examines the relationship between financial information transparency and donation income.The data is mainly from the Social Organization Network and we choose charitable foundations that disclosed their2010to2013annual reports.The empirical test results show that the correlation, integrity, and availability are all significantly positively correlated with donation revenues,while the timeliness and donation income have significantly negative correlation. The empirical test results of the public foundations are consistent with the total sample,but in samples of non-public foundations, timeliness and availability have failed to pass the test of significance.This study is a useful attempt that how to quantitatively evaluate the financial information transparency of charitable foundations. To a certain extent,it enriches the research about financial information transparency of charitable foundation.At the same time,it uses the empirical method to explore the effects of the financial information transparency for donation income,which is of positive theoretical and practical significance.But there are also some inadequacies in this article, which requires further research in the future.