Can The External Governance Mechanism Effectively Curb The Expenses Misreporting Of Charitable Foundations

In recent years,with the economic growth,China has paid more and more attention to the development of charity.Charitable donation is an important way of redistributing social funds.This method plays an irreplaceable role in adjusting the gap between the rich and the poor in various social strata,optimizing the allocation of resources,and promoting the harmonious development of society.And it is a favorable supplement to the government's macroeconomic control.Charitable foundations are a common form of non-profit organizations.As an important supplementary force of the government and the private sector,they are also in a vital position in China's entire economic development system.However,from the perspective of theoretical research and practical development,the development of China's charitable foundations relatively delays,and it is still at the initial stage.The domestic and foreign research about charitable foundations mainly focuses on the relationship between internal or external governance mechanisms and the cost efficiency of charitable foundation management,and the impact of financial information quality on charitable donation income,but pay a little attention on the behavior of expense misreporting.On the one hand,the managers of charitable foundations may conceal excessive on-the-job consumption by overestimating expenses;on the other hand,they may falsely increase public welfare expenditures by underestimating expenses.This is a behavior of expense misreporting about charitable foundations.This kind of behavior wastes social charity resources,damages the interests of donors,discourages the enthusiasm and confidence of donors,and affects the healthy development of public welfare charities.A comprehensive and effective set of Governance mechanisms to address this issue.With the Foundation Management Regulations of the State Council in 2004 as the institutional background,this paper conducts an empirical study on the expenses misreporting of charitable foundations,and tests the effectiveness of external governance on the expenses misreporting of the charitable foundations through auditing,government annual inspection and media attention.The results show that there are expenses misreporting in charitable foundation.Public foundations prefer to overestimate administrative expenses and fundraising expenses,non-public foundations prefer to underestimate fundraising expenses.There is no significant difference between public while non-public foundations in underestimating administrative expenses.From the perspective of governance effect,Big 100 plays a governance role on the underestimation of fundraising expenses and the annual inspection of the Ministry of Civil Affairs plays a governance role on the underestimation of administrative expenses,while media attention does not play a governance role on expenses misreporting.With the further research,there is no substantial difference in governance effect between public and non-public foundations.The research results can provide new concerns for the regulators and stakeholders of charitable foundation,and provide enlightenment for the improvement of the governance level of the entire charitable foundation industry.