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Regulatory reform: distinguishing between mutual-benefit and public-benefit entities

Carolyn Cordery (Department of Accounting, Business School, Aston University, Birmingham, UK)
Dalice Sim (Dean’s Department, University of Otago Wellington, Wellington, New Zealand)

Journal of Public Budgeting, Accounting & Financial Management

ISSN: 1096-3367

Article publication date: 2 September 2019

Abstract

Purpose

The purpose of this paper is to analyse nonprofit regulation through comparing and contrasting mutual-benefit and public-benefit entities. It ascertains how these entities differ in size, publicness, tax benefits and whether these differences might suggest regulatory costs should be differentiated.

Design/methodology/approach

This mixed-methods study utilises financial data, submissions and interviews.

Findings

There are stark differences in these two types of regulated nonprofit entities. Members should be the primary monitoring agency/ies for mutual-benefit entities, but financial reports should be understandable to these members. Nevertheless, the availability of tax concessions, combined with the benefits of limited liability, suggest mutual-benefit entities should be regulated and monitored by government in a way sympathetic to their size.

Research limitations/implications

As with most research, a limitation is this study’s focus on a single jurisdiction.

Practical implications

The differences in these entities’ characteristics are important for designing regulation.

Social implications

Better regulation is likely to require a standard set of financial reporting standards. Government has the right to demand disclosures due to benefits mutual-benefit entities enjoy.

Originality/value

In comparison to studies utilising only public-benefit data, this study uses unique data sets to compare public-benefit and mutual-benefit entities and presents nonprofit sector participant’s perceptions of these differences in context. This enables analysis of how better regulation could be achieved.

Keywords

Citation

Cordery, C. and Sim, D. (2019), "Regulatory reform: distinguishing between mutual-benefit and public-benefit entities", Journal of Public Budgeting, Accounting & Financial Management, Vol. 31 No. 3, pp. 431-450. https://doi.org/10.1108/JPBAFM-12-2018-0148

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited