Transparency Matters: Unveiling the Role of Accounting Disclosure and Profitability in Non-Profit Financial Reporting

This study examines the impact of accounting disclosure on the quality of financial reports in non-profit organizations, with a specific focus on the moderating role of profitability. Using empirical evidence from the Egyptian non-profit sector, the research integrates agency and signaling theories to explore the interplay between transparency, financial health, and stakeholder trust. The findings reveal that enhanced accounting disclosure significantly improves financial report quality, mitigating information asymmetry and fostering trust among stakeholders. Profitability is shown to amplify this relationship, serving as a critical enabler of robust disclosure practices by providing the necessary resources for comprehensive reporting. These insights underscore the urgent need for standardized accounting frameworks tailored to the unique characteristics of non-profit organizations. The study’s contributions extend to both theoretical advancements in non-profit financial reporting and practical implications for policymakers and practitioners aiming to enhance transparency, accountability, and sustainability within the sector. Limitations and avenues for future research are discussed, including the integration of digital technologies and the exploration of diverse non-profit contexts. This research highlights the transformative potential of improved accounting practices in strengthening stakeholder confidence and advancing the operational effectiveness of non-profit organizations.