Political Label and Selective Information Disclosure: Evidence from Charity Foundations in China

Abstract As the accountability movement is gaining momentum worldwide, nonprofit organizations are facing increasingly higher institutional requirements in terms of information disclosure. Nonprofit organizations need to disclose information to acquire legitimacy. However, information disclosure increases administrative costs, for which the upper limit is constrained by the law. In order to acquire legitimacy while reducing administrative costs, some of the nonprofit organizations selectively disclose their information. This paper examines the impact exerted on selective information disclosure by political labels. By using the interannual panel data of 4070 charity foundations in China’s Mainland from 2010 to 2014, this study finds out that the political label negatively influences selective information disclosure. This paper contributes to testing correlations between political labels and selective information disclosure in transition economy and provides solid evidence for studying selective information disclosure by nonprofit organizations.