The Impact Of Financial Information Disclosure Quality On Donations To Foundations

The 21st century ushered the great development of the foundation industry in our country. As one kind of important non-governmental organizations, foundations play an important role in social welfare and public policy, so as to improve the development of public welfare and the effective configuration of public resources, and promote the social and economic progress either. The public’s focus on the information disclosure quality continues to increase because of the public scandals in recent years, making information disclosure quality greatly affects the development of the foundations. The foundation industry in our country is in a dynamic development and open and competitive environment. How to attract more and better social resources is a crucial element concerning the health and long-term grow of the foundations. Whether the information that foundations disclosed will be an important reference for the donor in making a donation decisions, if the quality of the foundation’s financial information disclosure will affect their donation income and whether this effect will statistically significant, are well worth exploring. Therefore, this paper intends to test and analyze the relationship between donation income and the quality of financial information disclosure of foundations, so as to provide advice to the foundation’s operations and management.This paper first briefly reviews relevant literatures, then defines the concept of nonprofit organizations and foundations, and carries out the theoretical analysis based on the asymmetric information theory, principal-agent theory, signal transmission theory and stakeholder theory, thus propose this paper’s hypothesis, make the research design and empirical analysis, and finally get the conclusion and make recommendations. This paper combines normative analysis and empirical research, using data from 179 foundation representative, taking donations as the dependent variable, financial information disclosure quality as the independent variable and building research model to test the impact of financial information disclosure quality on donations.Through research and analysis the paper mainly draw the following conclusions: there is a significant positive correlation between the financial information disclosure quality and its donation revenues, which means that improving the quality of financial information disclosure can promote the donations of the foundations. In the sub-sample test, the financial information disclosure quality of public foundations and non-public foundations are both positively related to donation revenues, but the significance level of non-public foundations is lower than the public foundations. The testing results of control variables are also roughly in line with our expectations.Based on the empirical findings, the paper suggests that government regulars should improve the legislation and regulation and the nonprofit organizations accounting system, sound mandatory information disclosure system, strengthen third-party audit and establish industry regulation and the third party supervision system. Meanwhile, foundation itself should actively improve the quality of financial information disclosure. At the end of this paper, the limitations and shortcomings of this study are also pointed out and the future research prospects are proposed.