| This study examines whether Certified Public Accountants (CPAs) as board directors add value to nonprofit organizations. I hypothesize that CPAs play three roles on nonprofit boards: financial reporting risk reducers who improve the quality of internal control, financial reporting gatekeepers who limit earnings management, and trustworthiness enhancers who provide fiduciary assurance to donors. Using data from California nonprofit hospitals from 2000 to 2008, I find robust evidence that the presence of CPAs on nonprofit boards is associated with an increase in the quality of internal control over financial reporting and an increase in unrestricted charitable contributions. I also find limited evidence that having CPAs on boards is associated with lower likelihood of earnings management. |
