Increased Trust: The Effect of Disaggregated Financial Statements on Potential Nonprofit Donors

• In Event: Accounting, Behavior and Organizations I

Abstract

Significant research has been done on the effects of disaggregation of financial information for publicly traded companies. Disaggregated financial statements can create transparency for stakeholders in a given company. Little research has been conducted about how the disaggregation of financial statements affects decisions made by potential donors to nonprofit organizations. This study examines the effect that aggregate versus disaggregate financial statements has on a potential donor's decision to donate to both large and small nonprofit organizations. This study finds that trust in the organization serves as a mediator between level of aggregation and decision to donate. Understanding how potential donors react to the transparency of financial statements gives insight into how nonprofit organizations can gain trust from potential donors, and in turn, bring in more donations. Understanding how disaggregation affects donor decisions will answer questions on how closely nonprofit financial statements should resemble publicly traded companies' statements. In our supplemental analysis, we will also determine how levels of ego, altruism, hyper-competitiveness, and other demographic traits affect a potential donors concern for the disaggregation of financial statements to a nonprofit organization.

Authors

• Anthony Schmelzer, Ohio University

• Aaron Wilson, Ohio University