The influence of ownership on accounting information expenditures

Leslie G. Eldenburg, Ranjani Krishnan

Research output: Contribution to journalArticlepeer-review

33 Scopus citations


This paper analyzes the association among ownership, top management incentives, and expenditures on accounting information. We argue that organizations with privately appointed boards of directors such as for-profit and nongovernmental nonprofit organizations use incentive pay practices that encourage managers to use accounting information to improve performance. In contrast, government organizations are publicly governed and are constrained in their compensation practices because hospital CEOs are administrators of government-provided services. However, these hospitals must prove their efficiency to continue to receive adequate budgetary funding. Therefore government hospitals are more likely to use accounting information to gain legitimacy with stakeholders and regulators. Accordingly, we predict a positive relationship between expenditures on accounting information and contracting intensity in privately governed organizations, whereas we expect no such association for publicly governed organizations. We analyze data from California hospitals to determine differences in these roles across ownership types. We find a positive association between contracting intensity and expenditures on accounting information in privately governed hospitals, but no relation in publicly governed hospitals. Finally, we find differences in the use of accounting information within the privately governed hospitals, based on ownership. Whereas for-profit hospitals expend resources on accounting information that helps improve their revenue positions, nonprofit hospitals expend resources on accounting information that facilitates decision making related to operating efficiency and cost containment.

Original languageEnglish (US)
Pages (from-to)739-772
Number of pages34
JournalContemporary Accounting Research
Issue number3
StatePublished - 2008


  • Accounting information
  • Governance and compensation
  • Hospitals
  • Ownership structure

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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