The role of organizational forms in nonprofit firms' real earnings management: Evidence from nonprofit hospitals in Taiwan

Yi-Chieh Wen, Pinghsun Huang, Hsiu-Chu Shen and Yan Zhang

Advances in accounting, 2019, vol. 46, issue C, -

Abstract: Using a sample of 319 Taiwan's nonprofit hospital-years over the period of 2005–2010, we uncover evidence that nonprofit hospitals engage in real activity manipulation to meet earnings benchmarks through both core operating- and non-revenue-generating- expenditures. More importantly, we provide novel insight into the role of organizational forms in real earnings management for the nonprofit hospital sector. While private hospitals manipulate expenditures significantly upward or downward to achieve specific net income benchmarks, public hospitals, which are characterized by weaker financial incentives, manipulate earnings less extensively. We further find that, among private hospitals, real activity management is more pronounced in the non-religious group, suggesting that entity-level religiosity is likely to deter undesirable behavior.

Keywords: Healthcare quality; Hospital management; Ownership type; Real activity management (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:advacc:v:46:y:2019:i:c:015

DOI: 10.1016/j.adiac.2019.04.003

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