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Article
Publication date: 3 June 2019

Nancy Chun Feng, Daniel Gordon Neely and Lise Anne D. Slatten

The purpose of this paper is to test the association between various stakeholder groups and whether nonprofit organizations (NPOs) have obtained accountability accreditation. In…

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Abstract

Purpose

The purpose of this paper is to test the association between various stakeholder groups and whether nonprofit organizations (NPOs) have obtained accountability accreditation. In particular, the study intends to answer the following research questions: Does the governance of an NPO have any impact on the likelihood that the organization obtains certification? Does an NPO’s investment in executives affect certification efforts? Does employing a professional fundraiser play a significant role in whether an organization seeks accreditation? and Are certification efforts influenced by the relative sophistication of donors of the NPO?

Design/methodology/approach

Data were analyzed by examining information provided in the Internal Revenue Service revised Form 990, Part VI specifically from organizations holding the Standards for Excellence® (SFX) certification. This study uses a size- and sector-matched sample of 228 NPOs (half of which with the SFX certification and half without) to examine the association between accountability and governance in NPOs in both univariate and multivariate contexts.

Findings

The findings of this study indicate that organizations with strong internal governance (indicated by their answers to the governance-related questions in Form 990) are more likely to have obtained certification when compared to a group of nonprofits that did not receive the certification. In addition, nonprofits that invest more in their executives are more likely to receive SFX certification. Interestingly, external stakeholders (donors making restricted gifts, and professional fundraisers) are not associated with the likelihood of holding the SFX certification.

Research limitations/implications

Even though the study has attempted to control for factors that may have contributed to the findings (e.g. a size- and sector-matched peer for each NPO that secures the SFX seal in the final sample), it is not feasible to perfectly tease out all alternative explanations for the findings. Endogeneity issues may still be present given that the sample and comparison groups possess significantly different governance characteristics (i.e. governance scores, board independence, investments on executives).

Practical implications

The positive association between organization governance and investment in executives and the NPO’s certification credentials implies that certification may be used by these certified organizations as a signaling mechanism for strong governance. This would be consistent with the positive stakeholders’ reactions to NPOs’ accountability certifications that have been documented by Feng et al. (2016). The findings should help NPO board and staff members, researchers, and regulators to further understand the association between stakeholder groups and whether NPOs have obtained accreditation.

Originality/value

A thorough search of the relevant literature suggests that this study is the first one to link the association between stakeholder influence (proxied by the NPO’s governance strength, investments in executives, employing a professional fundraiser and donor sophistication) and an NPO’s decision to seek accountability accreditation. The findings should provide insights to stakeholders and researchers interested in examining the value of third-party accountability certifications and signaling mechanisms in NPOs and inform regulators regarding significant stakeholder influence on NPOs’ accreditation decision-making process. The results of this study also add to the body of literature on certification programs for NPOs.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 31 no. 2
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 March 2014

Nancy Chun Feng, Qianhua (Q.) Ling, Daniel Gordon Neely and Andrea Alston Roberts

Research in nonprofit accounting is steadily increasing as more data is available. In an effort to broaden the awareness of the data sources and ensure the quality of nonprofit…

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Abstract

Research in nonprofit accounting is steadily increasing as more data is available. In an effort to broaden the awareness of the data sources and ensure the quality of nonprofit research, we discuss archival data sources available to nonprofit researchers, data issues, and potential resolutions to those problems. Overall, our paper should raise awareness of data sources in the nonprofit area, increase production, and enhance the quality of nonprofit research.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 26 no. 3
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 26 March 2021

Jarmo Vakkuri, Jan-Erik Johanson, Nancy Chun Feng and Filippo Giordano

In addressing policy problems, it is difficult to disentangle public policies from private efforts, business institutions and civic activities. Societies may acknowledge that all…

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Abstract

Purpose

In addressing policy problems, it is difficult to disentangle public policies from private efforts, business institutions and civic activities. Societies may acknowledge that all these domains have a role in accomplishing social aims, but there are fundamental problems in understanding why, how and with what implications this occurs. Drawing upon the insights from the papers of this special issue, the authors aim to advance the understanding of governance and accountability in different contexts of hybridity, hybrid governance and organizations.

Design/methodology/approach

The authors conceptualize common theoretical origins of hybrid organizations and the ways in which they create and enact value by reflecting on the articles of the special issue. Furthermore, the authors propose agendas for future research into hybrid organizations.

Findings

Hybrid organizations can be conceptualized through two types of lenses: (1) the dimensions of hybridity (ownership, institutional logics, funding and control) and (2) their approaches to value creation (mixing, compromising and legitimizing).

Practical implications

This article provides more detailed and comprehensive understanding of hybridity. This contribution has also important practical implications for actors, such as politicians, managers, street-level bureaucrats, professionals, auditors and accountants who may be enveloped in various hybrid settings, policy contexts and multi-faceted interfaces between public, private and the civil society sector.

Originality/value

Hybridity lenses reveal novel connections between four types of hybrid institutional contexts: state-owned enterprises (SOEs), non-profit organizations (NPOs), social enterprises (SEs) and municipally owned corporations (MOCs). This paper provides theoretical instruments for doing so.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 33 no. 3
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 27 July 2020

Nancy Chun Feng

Using a sample of US nonprofit organizations, where the identity of the auditor in charge of the audit is revealed, I investigate whether individual auditor characteristics…

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Abstract

Purpose

Using a sample of US nonprofit organizations, where the identity of the auditor in charge of the audit is revealed, I investigate whether individual auditor characteristics (gender, engagement size and tenure) are associated with audit quality.

Design/methodology/approach

To investigate how individual audit partner characteristics affect audit quality, I follow Petrovits et al. (2011) and Fitzgerald et al. (2018) who investigate client characteristics and partner tenure as determinants of ICDs in nonprofits. I add three characteristics of the auditor in charge – gender, engagement size and tenure – to their models. In additional analyses, I use subsamples partitioned by client risk and audit firm size, and find that individual auditor characteristics generally play a more significant role in the issuance of ICDs and QAOs for riskier clients than for less risky clients.

Findings

My results show that female auditors are more likely to report internal control deficiencies and issue qualified audit opinions (QAOs) to nonprofits. I also find that auditors with more Single Audit engagements within the same year are less likely to report ICDs. In addition, auditor tenure is negatively associated with the likelihood of issuing an ICD report, suggesting that auditors become complacent as the length of the auditor–client relationship lengthens or, alternatively, that they are better able to assist their clients in correcting ICDs and in maintaining stronger internal control environments as they gain client-specific knowledge over time. Additional analysis suggests tenure and engagement load results are sensitive to the sample specification employed.

Research limitations/implications

One caveat of this study is that self-selection bias may be present when a client chooses an audit firm, the audit firm selects a client, and the audit firm assigns a partner to the engagement. Future study with more advanced econometric models is needed to mitigate self-selection bias. Another limitation is that my sample consists of nonprofit organizations and may not be generalizable to for-profit firms. Another caveat of this study is that the tenure variable is truncated compared to prior literature (e.g. Fitzgerald et al., 2018). Also given the rarity of audit quality measures in the nonprofit setting, internal control deficiencies and qualified opinions are used as proxies for audit quality because they reflect both the quality of audit work and the quality of organizations' internal control and financial reporting. Future studies with data including additional audit quality measures could shed more light on the topic.

Originality/value

This study contributes to the literature in several ways. First, this study offers a more comprehensive examination on the impact that a broader set of individual auditor characteristics on audit quality in the nonprofit setting, compared to Fitzgerald et al.'s (2018) study. Second, the findings should be of interest to policymakers who recently mandated engagement partner disclosures from US audit firms (PCAOB, 2015b). Finally, another distinctive feature of this study is that I examine the impact of individual auditor characteristics on audit quality in a setting where Big 4 audit firms are not dominant.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 32 no. 4
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 25 November 2013

Nancy Chun Feng

The purpose of this paper is to examine the potential effect of busy season resource constraints on the selection of a new auditor, conditioned upon the status of the prior…

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Abstract

Purpose

The purpose of this paper is to examine the potential effect of busy season resource constraints on the selection of a new auditor, conditioned upon the status of the prior auditor.

Design/methodology/approach

The paper employs multivariate logistic regressions for a sample of firms that changed auditors between 1979 and 2005 to explore the empirical correlations between having a December fiscal year-end (FYE) and non-lateral switches.

Findings

The paper finds that non-BigN clients with December FYEs are less likely to switch to BigN auditors than those with non-December FYEs prior to the enactment of the Sarbanes-Oxley Act (SOX). This trend subsides after SOX. For firms with BigN predecessor auditors, fiscal year-end appears to have insignificant influence on auditor switching.

Research limitations/implications

The findings suggest that upwardly mobile clients face greater audit supply constraints compared to clients already being audited by a BigN firm during the traditional busy season. However, the curbing influence on switching upwards erodes after SOX.

Practical implications

This study is to show the impact of supplier capacity constraints on audit production and structural changes within the auditing profession.

Originality/value

The findings can further the understanding of the determinants of auditor-client realignment, given that the paper identifies and explores the effects of having a December FYE on subsequent auditor appointments, conditioned upon the status of the prior auditor.

Details

Journal of Applied Accounting Research, vol. 14 no. 3
Type: Research Article
ISSN: 0967-5426

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Book part
Publication date: 16 July 2019

Ahmet C. Kurt and Nancy Chun Feng

Many argue that the design of compensation contracts for public company chief executive officers (CEOs) is often not guided by a goal of value maximization. Yet, there is limited…

Abstract

Many argue that the design of compensation contracts for public company chief executive officers (CEOs) is often not guided by a goal of value maximization. Yet, there is limited direct empirical evidence on the negative consequences of the proposed inefficient contracting between shareholders and CEOs. Using data on CEO bonus contracts of the S&P 500 firms, we investigate potential firm performance implications of the use of qualitative criteria such as leadership and mentoring in those contracts. We maintain that unlike quantitative criteria, qualitative criteria are difficult to define and measure on an objective basis, possibly resulting in an inefficient and biased incentive structure. Twenty-five percent of the sample observations have CEO bonus contracts that include a qualitative criterion for bonus payment determination. Our results show that employee productivity, asset productivity, capital expenditures, and future abnormal stock returns are lower for firms that use a qualitative criterion in CEO bonus contracts than those that do not. Further, contrary to the argument in prior literature that earnings management decreases with the use of subjective performance indicators in incentive contracts, we find that income-increasing accruals are actually higher when the CEO bonus contract includes a qualitative criterion. We recommend that compensation committees set concrete, measurable performance goals for CEOs, providing CEOs with better guidance and helping improve their corporate decision making.

Available. Content available
Book part
Publication date: 16 July 2019

Abstract

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78973-278-8

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Article
Publication date: 6 February 2023

Huilan Zhang

Most prior studies investigating determinants of CEO compensation in nonprofit hospitals ignore how managerial ability affects compensation. This study aims to examine whether…

399

Abstract

Purpose

Most prior studies investigating determinants of CEO compensation in nonprofit hospitals ignore how managerial ability affects compensation. This study aims to examine whether CEOs with greater ability to manage corporate resources efficiently receive more payment in nonprofit hospitals.

Design/methodology/approach

This study employs a sample of 764 observations from 85 Pennsylvania nonprofit hospitals for the period 2010–2020.

Findings

This study finds a positive and statistically significant association between managerial ability and CEO compensation. The results are robust to alternative measures of managerial ability.

Practical implications

The measure of managerial ability proposed in this study could be used by boards of directors to quantify, evaluate and benchmark CEO ability. The results are also relevant to policymakers, stakeholders and the public interested in understanding the determinants of CEO compensation in nonprofits.

Originality/value

This study is among the first to use a more precise measure of managerial ability, which captures the unobserved manager-specific aspects of CEO ability. In addition, this study contributes to the literature by providing evidence that CEO's ability to manage hospital resources efficiently plays an essential role in designing executive compensation contracts.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 35 no. 2
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 15 June 2015

Yuanqiang Tan, Rong Deng, Y T Feng, Hao Zhang and Shengqiang Jiang

The purpose of this paper is to establish a new two-phase Discrete Element Method (DEM) model to investigate the movement of fresh concrete which consists of mortar and aggregate…

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Abstract

Purpose

The purpose of this paper is to establish a new two-phase Discrete Element Method (DEM) model to investigate the movement of fresh concrete which consists of mortar and aggregate. The established DEM model was adopted to simulate the mixing process of fresh concrete based on the commercial software package PFC3D. The trajectories of particles and particle clusters were recorded to analyze the mixing behavior from different scales. On one hand, the macro-scale movement was obtained to make the mixing process visualization. On the other hand, the relative micro movement of the single particle and particle clusters was also monitored to further study the mixing mechanism of the fresh concrete.

Design/methodology/approach

A new two-phase DEM model was designed to simulate the movement of fresh concrete which consists of mortar and aggregate. The linear-spring dashpot model was used to model all the contacts between particle and particle/wall to characterize the viscidity of fresh concrete. Moreover, two sets of parallel bond models were employed to characterize the contact between the mortar particles and mortar/coarse aggregate particles, namely the pbond1 and pbond2. The hybrid treatment enables the current DEM model to handle the yield behavior.

Findings

The mixing process of fresh concrete is mainly composed by the transportation in the x-direction and the overturn and fall off in the y- and z-directions. With these movements in different directions, the concrete particles can be fully mixed in the mixing drum.

Originality/value

A new two-phase DEM model was proposed and used to simulate the mixing process of fresh concrete. The outcomes of the simulation would be helpful for making the transporting truck visualization and the movement behavior of fresh concrete observable. The model can provide dynamic information of particles to reveal the interaction mechanism of fresh concrete in the truck mixer which is extremely difficult to obtain on-line in physical experiments or building site.

Details

Engineering Computations, vol. 32 no. 4
Type: Research Article
ISSN: 0264-4401

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