VOLUNTARY DISCLOSURE AND INSTITUTIONAL THEORIES: THE CASE OF DUTCH HEALTHCARE ORGANIZATIONS

VOLUNTARY DISCLOSURE AND INSTITUTIONAL

THEORIES: THE CASE OF DUTCH HEALTHCARE

ORGANIZATIONS

Dieterman, G.A.M. (Marjon)

S2726610

Rijksuniversiteit Groningen

MSc A&C track Accountancy

June 25, 2018

Supervisor: mw. dr. E.G. (Elma) van de Mortel

Co-assessor: dr. C.P.A. (Coen) Heijes

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Abstract

Financial transparency is needed in the Dutch healthcare sector, arguments Jeroen Suijs, professor at Tilburg University. Accountability and financial transparency has become more important aspects in the landscape of financial reporting. This study provides evidence regarding voluntary disclosure in Dutch healthcare organizations. Based on a sample of 90 Dutch healthcare organizations, I studied to what extent voluntary disclosure could be explained by institutional theories. The results indicate that Dutch healthcare organizations engage in voluntary disclosure in the years 2012 and 2016. Furthermore, the results show that Dutch healthcare organizations demonstrate more voluntary disclosure over time. This research expands current literature by focusing on Dutch healthcare organizations, operating in three different branches (nursing, care and homecare organizations – hospitals – and mental healthcare organizations).

Keywords:

healthcare – nonprofit – institutional theory – voluntary disclosure – transparency – Dutch healthcare organizations.

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Foreword

I would express my gratitude to everyone directly or indirectly involved into the completion of this master thesis, which I wrote for graduating the Master Accountancy at the University of Groningen. First, I want to thank my supervisor Elma van de Mortel for her clear feedback and input during the process of writing this thesis. Second, I want to thank Angela van Teijen for her clear feedback and ideas. Third, I want to thank my family, boyfriend and friends. They constantly supported and motivated me during the process of writing my thesis.

Finally, I hope you enjoy reading my thesis.

Kind Regards, Marjon Dieterman.

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TABLE OF CONTENTS

I. INTRODUCTION ... 4

1.1 Reason of study ... 4

1.2 Purpose ... 5

1.3 Scientific & Societal contribution ... 6

1.4 Structure ... 6

II.

DESCRIPTION OF CONTEXT ... 7

2.1 Dutch healthcare system ... 7

2.2 Branches in the healthcare sector ... 8

2.3 Financial reporting ... 10

III.

THEORY ... 13

3.1 Voluntary disclosure: definition and motivations ... 13

3.2 Previous for-profit research concerning voluntary disclosure ... 14

3.3 Previous non-profit research concerning voluntary disclosure ... 15

3.4 Institutional theories: definition and streams ... 15

3.5 Isomorphism ... 16

3.6 Contingency theory ... 18

IV.

RESEARCH DESIGN ... 20

4.1 Research Method ... 20

4.2 Sample and Period ... 20

4.3 Dependent Variable: Voluntary Disclosure ... 22

4.4 Independent Variables ... 23

4.5 Control Variables ... 24

4.6 Testing Hypotheses and Model Development ... 25

V.

RESULTS... 27

5.1 Adjustments in dataset ... 27

5.2 Descriptive statistics and multicollinearity ... 27

5.3 Results ... 28

VI.

CONCLUSION AND DISCUSSION ... 36

6.1 Conclusion ... 36

6.2 Discussion ... 37

6.3 Limitations ... 38

6.4 Future Research ... 38

REFERENCES ... 40

APPENDICES ... 47

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I. INTRODUCTION

The first chapter of this study comprehends the introduction to the research conducted. The first section contains the reason behind this study. Thereafter, a description of the purpose of this study is followed by the scientific and societal contribution. The structure of this study is outlined in the fourth section.

1.1 Reason of study

Jeroen Suijs1 _{argues that: “There is a great need to financial transparency in the Dutch healthcare sector”}

(Ten Katen & Eikelenboom, 2017, p. 1). In the last decades, accountability has become a more important topic in both public and non-profit sectors, due to crises and many scandals (Greiling & Stötzer, 2016). Non-profit organizations, including organizations in the healthcare sector (in the Netherlands part of the semi-public sector), are confronted all over the world with a growing demand for accountability and financial transparency with the question of what to disclose and what to keep from the public (Saxton et al., 2012).

In the past few years, several legal changes, tightening of laws and regulations and the implementation of new laws and regulations have occurred at a rapid pace within the healthcare sector. Legal pressure is not the only aspect to consider. Pressure also includes working pressure, pressure from society due to an increasing demand of healthcare, budget cuts, and also quality standards are becoming more important (Schouteten et al., 2017). Pressure from the professional group is also increasing, since healthcare organizations should complete extra jobs like securing patient data (Kwon & Johnson, 2013). In other words, due to legal changes and pressure in several forms, healthcare is continuous in motion and changes fast (Schouteten et al., 2017). As a consequence of these changes and pressure, expectations of stakeholders increase, which influences the financial reporting of healthcare organizations (Deloitte, 2017). What and how much it is necessary to report? What information is voluntarily released? This research focuses on the voluntary aspect of disclosed information in the annual reports of healthcare organizations, specifically for Dutch healthcare organizations operating in three different branches. Along with the mandatory parts of financial reporting, voluntary disclosures are becoming more important aspects in the landscape of compliance (Sheeder, 2003).

The Dutch healthcare sector is seen as the best but most expensive of Europe (Zorgwijzer, 2016), and it has to cope with much pressure due to several changes in existing regulations and the appearance of new ones. In 2006, the law of admission for healthcare organizations (Wet toelating zorginstellingen

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[WTZi] in Dutch) was introduced, and this motion reflects some consequences for financial reporting of healthcare organizations in the Netherlands in terms of transparency.

Voluntary disclosure is defined by the Financial Accounting Standards Board (FASB2_{) (2001) as:}

“disclosures, primarily outside the financial statements that are not explicitly required by GAAP3 _{or an}

SEC4 _{rule’’ (p. 5). The Dutch version of the SEC is the AFM}5_{. In general, voluntary disclosure of}

information to stakeholders can be important to maintain market efficiency, to deliver preferable results and to reduce information asymmetry (Zhuang et al., 2014). However, the decision to disclose information is not without any risks – the disclosure of bad news or disclosing too much information which can turn into ‘information overload’, for example (Tian & Chen, 2009). Broadly speaking, (voluntary) disclosure tends to diminish information asymmetry between the management and the external stakeholders (Charumathi & Ramesh, 2015).

Research into voluntary disclosure is explained by several underlying theories. In this research, institutional theories – theories on the deeper aspects of social behavior and structure (Burns & Scapens, 2000) – will be considered. The use of institutional theories as a dimension of organizational behavior is not often studied in relation with voluntary disclosure; however, institutional theories can probably explain voluntary disclosure behavior in Dutch healthcare organizations since it explains continuity and change in organizations (Ashworth et al., 2007).

1.2 Purpose

This paper expands current literature regarding the research of voluntary disclosure and examines specifically whether institutional theories explain voluntary disclosure in Dutch healthcare organizations. The purposes of this study are: (1) to determine whether institutional theories can explain voluntary disclosures in healthcare organizations, (2) to examine if there are differences between disclosures in different branches and (3) to make a comparison of voluntary disclosure over time. Therefore, the research question central to this paper is formulated as follows:

To what extent can voluntary disclosure in Dutch healthcare organizations be explained

by institutional theories?

The research question encompasses the following subquestions: 1) What is voluntary disclosure and why is it relevant to study it? 2) What are institutional theories? 3) What is the healthcare sector? To answer the research- and sub-question(s), the annual reports of Dutch organizations in the healthcare

2 _{The FASB (Financial Accounting Standards Board) establishes and improves the standards for financial}

reporting and accountancy.

3 _{General Accepted Accounting Principles (GAAP) is the standard framework for accounting principles,}

procedures and standards that organizations should follow in their financial reporting.

4 _{SEC is the Securities and Exchange Commission, the American supervisor of several stock exchanges.} 5 _{Autoriteit Financiële Markten; the independent supervisory authority for the financial markets.}

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sector are compared, whereby a voluntary disclosure index is established to measure the extent of voluntary disclosure.

1.3 Scientific & Societal contribution

The contribution of this research is twofold. First, little is known about the relation between voluntary disclosure and institutional theories. In other research papers, board strategy, knowledge management and mission endangerment (Parker, 2007; Currie & Suhomlinova, 2006; Dolnicar et al., 2008) are just a few of the research topics linked to institutional theory to explain the conduct of organizations. The study of Iliya Nyahas et al., (2017) focuses on the relationship between isomorphic influences (one stream of institutional theory) and voluntary disclosure. In the present paper, several institutional theories are linked to voluntary disclosure, which contributes to expanding the existing literature. Second, in most research papers, when focusing on voluntary disclosure, the focus is often on for-profit organizations and stock-listed companies (like Sejjaaka, 2005; Uyar et al., 2013). Dutch healthcare organizations are non-profit organizations and in addition, little research has been done into Dutch organizations. For example, the research of Barako et al., (2006) focused on Kenya, Damagun and Quinn (2013) focused on Nigeria, and Qu et al., (2012) focused on the China. Since Dutch healthcare is seen as qualitatively high, although very expensive (Zorgwijzer, 2016) and since it faces much pressure due to various legal changes, it is therefore quite interesting to conduct research into Dutch healthcare organizations.

For organizations in the healthcare sector it is difficult to determine whether they should handle it in the interest of the organization, or in the interest of the society (Allen-Duck et al., 2017). By measuring the extent of voluntary disclosure, the contribution to society is in exploring whether voluntarily disclosed information actually adds value to external stakeholders.

1.4 Structure

The remainder of this paper is organized as follows. In chapter two, a description of the context (Dutch healthcare system) and sectors is elaborated. In the third chapter the theoretical framework is developed and therefrom the hypotheses arise. Thereafter, the methodology is discussed. In the fifth chapter the empirical results are described and, finally, the conclusion, discussion, limitations and recommendations for future research are addressed.

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II.

DESCRIPTION OF CONTEXT

In this chapter an introduction of the Dutch healthcare sector is given first. Thereafter, the different branches and their characteristics are outlined and discussed to further develop the methodology of this research. The description of the context serves as background information.

2.1 Dutch healthcare system

Due to the increasing number of elderly people (‘ageing’) in the Netherlands, there is an increasing need for healthcare. The Dutch healthcare system aims to ensure that a good-quality healthcare is accessible to everyone and to create solidarity by means of compulsory and accessible health insurance (Westert & Verkleij, 2006). Quality is perhaps the most essential theme when it comes to performance of healthcare systems (Sluijs et al., 2002).

Dutch healthcare system is regulated by four system laws, which are:

- Healthcare Insurance Act {as of 2006} (in Dutch: de Zorgverzekeringswet [Zvw]) - Act for long-term care {as of 2015} (in Dutch: de Wet langdurge zorg [Wlz])

- Social Support Act {as of 2015} (in Dutch: Wet maatschappelijke ondersteuning [Wmo]) - The Youth Law {as of 2015} (in Dutch: Jeugdwet)

(Ministerie van Volksgezondheid, Welzijn en Sport, 2016). From a financial perspective, in 2006 the WTZi was implemented. This law was the starting point of mandatory disclosure for healthcare organizations (only excepting military organizations). Before 2006, all financial reporting for healthcare organizations was on a voluntary basis. As a result of this new law, some organizations disclose the compulsory information; others also disclose additional information. The Dutch healthcare sector is private (because its aim is continuity), but performs public tasks (serving citizens, using a strong role of the government) (Exter et al., 2004). In this study, healthcare organizations will be considered as non-profit organizations. In most cases, its legal form is a foundation and therefore subject to a statutory audit6_{. The main difference between for-profit and non-profit}

organizations is their aim. The aim of for-profit organizations is to make profits, while the aim of a healthcare organization is to provide good-quality care so that as many people as possible can be cured. However, healthcare organizations could also make profits - to build financial reserves, for example (Van Besouw, 2005). Healthcare is funded by multiple organizations: care offices, municipalities, health insurers and justice (Nederlandse Vereniging van Banken, 2017). The Netherlands consist of 31 care offices (Zorgverzekeraars Nederland, n.d.), 50 health insurance organizations (Zorgkaart Nederland, 2018) and, in recent years, the number of municipalities is declining (respectively 412 in 2012; 390 in

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2016) (Ernst, n.d.). The healthcare sector consist of a large amount of different providers. In the Netherlands, the sector can be subdivided into 5 branches:

- Nursing, care and homecare (in Dutch: verpleging, verzorging en thuiszorg [VVT]); - Hospitals;

- The disabled care sector;

- Mental healthcare organizations (in Dutch: geestelijke-gezondheidsinstellingen ([GGZ-instellingen]);

- Other healthcare (like dental practices, general practitioners and physiotherapy).

(Kalkhoven & van der Aalst, 2015). During this research the three largest branches (based on revenues and number) are considered: VVT-organizations, hospitals and GGZ-organizations. Therefore, they are quite interesting to study. Next to that, these are the best known and changing legislation has the most impact on these branches. The disabled care sector and other healthcare are excluded because they are relatively small in number, divergent (mainly ‘other healthcare’) and relatively little has changed in relation to their financial reporting. In the following section, a more extended description and explanation of the different branches is given. In addition, their distinctive features, pressure, uncertainty and the changes with which they have to deal is elaborated.

2.2 Branches in the healthcare sector

VVT: Nursing, care and homecare.

The VVT-branch represents the largest branch in Dutch healthcare, with around 5800 organizations at the beginning of 2018 (Zorgkaart Nederland, 2018). In terms of revenues, this branch accounts for a total of €16.4 billion (Intrakoop, 2017). The VVT-branch consists of:

• Nursing (in Dutch: verpleging): nursing homes particularly deliver nursing for prolonged stay within a healthcare organization (inpatient nursing).

• Care (in Dutch: verzorging): care homes particularly deliver care for long or short stay with the use of care; mostly this involves lesser heavy care than nursing homes (inpatient care). • Homecare (in Dutch: thuiszorg): homecare agencies particularly deliver nursing, personal care,

guidance and day/household care to people who live at home (Dumaij, 2011).

Important changes relevant to this research.

In 2015, the law for long-term care (in Dutch:

Wet Langdurige Zorg [Wlz]) for both nursing- and care homes was introduced. The basic tenet of this

law is that people have to live in their own home for as long as possible. Only when living at home is no longer possible, care- or nursing homes provide locations (Zorg voor beter, 2014). For homecare organizations, the law social support (Nieuwe Wet maatschappelijke ondersteuning [Wmo]) applies

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since 2007. This is only for domestic help. Care at home falls within health insurance. Municipalities have to ensure that people have to live at home for as long as possible (Potting, 2009). Day-to-day activities and support have been added to municipalities since the beginning of the new Wmo. Apart from this, in 2015 also the Healthcare Insurance Act changed. Care within Exceptional Medical Expenses Act (in Dutch: Algemene Wet Bijzondere Ziektekosten [AWBZ]) came under the Healthcare Insurance Act as of 2015. This extends the basic package with allowances for people with a sensory disability, nursing and care at home and long-term stay in a mental health organization (Bart, 2014). VVT-organizations have three different funders: agreements with care offices (Wlz), municipalities (Wmo) and nursing within homecare is funded by the health insurer (Zvw) (Bart, 2014).

Uncertainties and pressure. First

, the existence of VVT-organizations is uncertain, which can

lead to bankruptcies (Zorgvisie, 2010). On the one hand, savings and shifts from budgets (to Zvw and Wmo), and on the other hand there is a growing demand in healthcare. Thus, more care has to be supplied with fewer resources and money. Therefore, the survival of VVT-organizations is uncertain. Contrary to the other branches, the risk of bankruptcy for VVT-organizations is significant higher as a consequence of many liquidations and competition in this branch (Budding, 2016). Second, by legislative amendments, tasks are admitted to municipalities which are free to choose which healthcare provider they purchase from (Actiz, 2012), which results in uncertainty for healthcare providers (when they operate in an area with a lot of municipalities).

Hospitals.

The Netherlands has 321 hospitals, including general and academic hospitals (Zorgkaart Nederland, 2018). Therefore, in terms of numbers, it is the smallest branch included in this research. However, in terms of revenues, hospitals reveal the highest numbers. In 2016, total revenues were €27.1 billion (Intrakoop, 2017). The tasks of hospitals are extensive because there a many different people working - doctors, nurses, surgeons but also carers, all of which have different tasks. This branch is funded by health insurance companies (Zvw) (Degadt & van Herck, 2003).

Important change relevant to this research.

The introduction of the Diagnostic-treatment

combination (in Dutch: Diagnose-behandelingscombinatie [DBC]) is the most important change relevant to this research. In 2012, DBC was introduced in Dutch healthcare. DBC corresponds to a nine-digit code, related to the total amount of hospital activities and is used by specialized hospitals and mental healthcare (Zorgwijzer, 2018). In other words, with a DBC one gets insight into the total treatment process: not every treatment is separately paid (van de Kerkhof, 2010). For example, not each action like an injection or X-ray is paid separately. This product can be seen as a package form of care to patients used by certain treatments, such as a broken arm. The price of the healthcare product is the average of all healthcare costs that come with a certain diagnosis.

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Uncertainties and pressure.

Hospitals are related to fewer uncertainties and pressure relative to

GGZ-organizations in the past few years. As of 2012, their financial positions had improved (Deloitte, 2012a). However, in 2012 DBC was introduced. The financial effects of this new structure are uncertain next to negotiations with health insurance organizations (Deloitte, 2012a).

GGZ-organizations.

In the Netherlands, we have about 1600 mental healthcare organizations that include organizations in mental health care, but also in addiction care (Zorgkaart Nederland, 2018). In terms of revenues, GGZ-organizations were responsible for €7.7 billion totally in 2016 (Intrakoop, 2017). A mental care organization offers help to adults, children and the elderly in case of mental health problems and serious mental and psychiatric illness. The tasks of GGZ-organizations are the prevention of mental disorders, treatment and healing of mental disorders, allowing people with mental disorders to participate in society and providing assistance to people who are seriously confused/addicted and who do not seek help of their own accord (GGZ Nederland, 2017). This branch is funded by care offices (Wlz), municipalities (Wmo and Youth Law), insurance companies (Zvw) and the Ministry of Justice (GGZ Nederland, 2010).

Important changes relevant to this research.

The Wlz, new Wmo and Zvw also had

implications for GGZ-organizations as of 2015. Wmo is now being executed by municipalities and provides support for people who live independently. As of 2015, the Zvw organizes GGZ-care for people at home (18+) and the Youth Law ensures that municipalities are responsible for GGZ-care (18-). The Wlz is being executed by healthcare offices, for people who need the most intensive long-term GGZ-care (GGZ in Geest, 2014).

Uncertainties and pressure.

Uncertainties and pressure of GGZ-organizations are roughly equal

to VVT-organizations. Here again, the changing regulation of tasks which are transferred to municipalities plays an important role, which can create uncertainty for GGZ-organizations who are operating in areas with multiple municipalities. Besides that, GGZ-organizations’ financial results are under pressure as a result of failing rates and production volumes and increasing personnel and audit costs (Accountant, 2017). Also, GGZ-organizations are under pressure of health insurance companies, since they focus on quality of delivered care and efficiency of the treatment (Deloitte, 2012b).

2.3 Financial reporting

In the Netherlands, RJ-guidelines7 _{(guidelines financial reporting) exist for all kind of organization}

types. In particular, RJ 665 is applicable for healthcare organizations. In this guideline, the content of the annual report of a healthcare organization is described. The annual report consists of a balance sheet,

7 _{RJ-guidelines (Council for Annual Reporting, in Dutch: Richtlijnen voor de Jaarverslaggeving) is an advisory}

body whose objective is to improve the quality of the external reporting of non-listed organizations in the Netherlands.

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income statement, cash flow statement and explanations of this financial statements (RJ 665, 2016). A standard model for the balance sheet and income statement is described on the website on which Dutch healthcare organizations have to publish their year-document (www.jaarverantwoordingzorg.nl). This format entails minor differences for care and cure organizations. The standard format Annual Report ‘care’ organizations is applicable for VVT-organizations and GGZ-organizations, while Annual Report ‘cure’ organizations is applicable for hospitals. The mandatory items in the annual reports are summarized below.

(Jaarverantwoording zorg, 2016a; Jaarverantwoording zorg, 2016b)

Requirements financial reporting hospitals.

As of 2012, when the new DBC-regulation was introduced, it was one step towards more financial transparency for hospitals. From then on, DBCs are recorded in the financial reporting for hospitals – as a consequence, there is more extensive revenue recognition than before. Additional items on both the balance sheet and income statement arose: work in progress arising from DBCs (balance sheet) and revenues arising from DBCs (income statement). For the other branches being studied (VVT- and GGZ-organizations), no relevant changes due to new legislation (Wlz, Wmo and Zvw) were encountered leading directly to more transparency in their financial reporting.

Table 1 Standard Format Annual Reports ‘care’ and ‘cure’ organizations. The annual report should consist of:

- Balance sheet

- Income statement (‘cure’ shows: revenues social support. ‘Care’ shows fee independent medical specialists).

- Cash Flow statement

- Accounting policies that have been applied

- Notes to balance sheet (a few differences for ‘care’ and ‘cure’ organizations). - Statement of changes in immaterial and material fixed assets

- Overview of loans

- Income statement per segment

- Notes to income statement (a few differences for ‘care’ and ‘cure’ organizations). - WNT-accountability (WNT = law standards remuneration executive officers) - Remaining data

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Management report (voluntary part for foundations).

In addition to financial reporting, organizations were, before 2012, required to publish a management report next to the financial statements. As of 2012, the publication of a management report is no longer mandatory for organizations structured as foundation (Walhout & Vervoort, 2013). For them, the individual or consolidated annual accounts suffice and publishing a management report is voluntary. However, there are several reasons why such organizations still publish a management report – mainly, to add value and to be more transparent. Moreover, organizations can prepare a more extended annual report, for example by mentioning additional information about strategy and goals.

When an organization has a legal form as in article 360, paragraph 1 and 2 BW 2 Title 9 (private companies [in Dutch: BV] or a public limited company, for example) and the WTZi is applicable, these are required to publish a management report (Walhout & Vervoort, 2013). They have to prepare the annual report (management report) in accordance with requirements in Article 391 of BW Title 9/ RJ

400. According to this requirement organizations should:

• Describe the main risks/uncertainties which would have to be taken into account since the organization is confronted with them. The following categories are relevant: strategy, operational activities, financial position, laws and regulation.

• Provide insight into measures to mitigate risks or address uncertainties.

• Mention the possible impact of the risks or uncertainties, when a risk or uncertainty becomes reality.

• Describe the effects of risks or uncertainties that have occurred. • Mention the possible adjustments in the system of risk management.

(RJ 400, 2014) To sum up, an organization should mandatorily prepare the financial statements following the standard format on www.jaarverantwoordingzorg.nl. A management report is not mandatory for all healthcare organizations. For foundations, the management report is voluntary disclosure. Therefore, the focus of this research is on foundations. Their voluntary disclosure is stated in their management reports. After 2012, it is not required to publish a management report. The question raises whether foundations publish a management report and what kind of information they disclose on a voluntary basis.

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III. THEORY

In this chapter, the theoretical framework of this research is developed. The first section contains voluntary disclosure in general, its importance and possible motivations (as well as motivations not to do so). In the following two sections, previous research concerning voluntary disclosure for both profit and non-profit organizations will be elaborated. In section 3.4 institutional theories are introduced and this section contains the explanation and background of institutional theories. As for section 3.5, institutional theories are discussed: isomorphism and contingency theory. Out of this theories, several hypotheses follow.

3.1 Voluntary disclosure: definition and motivations

Voluntary disclosure.

Voluntary disclosure differs from mandatory disclosure in that mandatory disclosure are revelations following requirements of regulators in a certain country (Charumathi & Ramesh, 2015). According to Fung et al., (2007) voluntary disclosure is a criterion to measure transparency. An organization could disclose not only positive information – good news – but also disappointments – bad news. This can influence stakeholders and improve transparency of the organization. The disclosure of information is also called the publication of information, whereby disclosed information is published and therefore accessible for everyone (Tian & Chen, 2009). In addition, disclosure of information is most useful if it notifies about prior plans, goals and the results in meeting them (FASB, 2001). An organization can disclose information voluntarily across different categories. In their paper, Charumathi and Ramesh (2015) make a distinction between the following voluntary disclosure categories: strategy on general, forward-looking statements, human and intellectual capital, social and environmental, non-GAAP, stock market information and foreign exchange information. However, this research focuses on voluntary disclosure of financial and strategic information, so the first two categories of the research of Charumathi and Ramesh (2015) are used.

Importance of – and motivations towards (and against) voluntary disclosure.

Voluntary disclosure is an interesting, frequently studied subject in accounting. It could play a major role in organizations because via voluntary disclosure an organization can distinguish itself from other organizations in the market (Zhuang et al., 2014). In his paper, Deegan (2002) documents several possible motivations why organizations could decide to publish information voluntarily: compliance with requirements and regulation, due to rationality thoughts, to create accountability or responsibility, because of its relevance for admission to finance/recruit investors, to comply with society’s prospects, to forge or retain legitimacy, to deal with special stakeholder groups, to obey specific codes of conduct or industry obligations, to operate before government operates or to win reporting rewards or benchmarks.

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According to Tian and Chen (2009), disclosure of voluntary information could be relevant for, firstly, companies’ reputation. When disclosures, and more specifically voluntary disclosures, are better and more, then the brand equity of an organization is stronger (Sarkar & Bhattacharjee, 2017). However, it can also have a negative effect on the reputation of an organization. In the second place, voluntary disclosures are also good for investors. The level of voluntary disclosed information is in the interest of prospective investors. Lang and Lundholm (1993) state that organizations have incentives to disclose more voluntary information because nondisclosure could be understand as bad news by investors. Therefore, investors see positive voluntarily disclosed information as good news and are therefore able to invest more and earlier in an organization. On the other hand, too much information can ‘obscure’ the message. In the third place, voluntary disclosure is good for the accusation of risk avoidance. The decision to disclose information by the management in each period is determined by different factors such as the extent to which the management is able to take risks (Einhorn & Ziv, 2008). When the manager is more risk-averse, he fears to disclose too much information (‘information overload’) because this information overload causes risks or uncertainties. Therefore, the manager chooses to disclose not much (or still nothing) voluntary information. In doing so, he complies strictly with prescribed, mandatory disclosure requirements.

However, non-disclosure is considered a) when information could have a negative effect on the organization’s reputation, b) when the management is more risk-averse (Einhorn & Ziv, 2008), c) when setting a previous measure, a so-called ‘precedent’ (Graham et al., 2005). When managers in the past have decided to disclosure information voluntarily, this motive should be maintained over time since the market would expect new voluntarily disclosures (Graham et al., 2005). This precedent could therefore arranged for an incentive to diminish the amount of voluntary disclosures. Non-disclosure is also considered d) when possible advantages do not outweigh costs. Costs are an important factor in the voluntary disclosure decision (Depoers, 2000). Different types of costs may arise from voluntary disclosure; proprietary-, agency-, and/or political costs (Shehata, 2014). Costs and their consequences may restrain healthcare organizations from doing voluntary disclosures, in particular if the costs do not outweigh the benefits.

3.2 Previous for-profit research concerning voluntary disclosure

Much research in accounting concerns voluntary disclosure. In particular, most of the research into voluntary disclosure concerns for-profit and stock-listed organizations. In the current literature, research is done frequently into nonfinancial voluntary disclosure of information or financial voluntary disclosure of information. In his paper, Core (2001) discusses the disclosure literature. In the introduction of his paper, he says: ‘‘The voluntary disclosure literature appears to offer the greatest opportunity for large increases in our understanding of the role of accounting information in firm valuation and corporate finance’’ (p. 1). In addition, Core (2011) argues that voluntary disclosure behavior of the management of an organization is determined by identical strengths that forms firms’ governance structures and

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management incentives. In general, several factors can have influence on the voluntary disclosure behavior. Factors that have been most frequently studied (and all have a positive effect on voluntary disclosure) are (institutional) ownership structures, board composition, size, leverage, presence of an audit committee, industry type, financial situation, economic performance and audit (Eng & Mak, 2003; Charumathi & Ramesh, 2015; Barako et al., 2006; D’Amico et al., 2016). Most of research into voluntary disclosure makes use of a disclosure score or index as proxy to measure the extent of voluntary disclosure (Eng & Mak, 2003; Charumathi & Ramesh, 2015). In their research, Iliya Nyahas et al., (2017) focused on isomorphic influences and voluntary disclosure and found that both coercive (measured by compliance with guidelines) and normative isomorphism (measured by compliance with the professional code of practice) are positively associated with voluntary disclosure in Nigerian listed firms.

3.3 Previous non-profit research concerning voluntary disclosure

There are also examples of non-profit research with regard to voluntary disclosure; however this research is done in a lesser extent, contrary to for-profit voluntary disclosure research. Non-profit research concerning voluntary disclosure is useful to this paper because in this research healthcare organizations are considered as non-profit organizations. There are some factors such as size, board composition and audit which also have a positive effect of voluntary disclosure at non-profit organizations, equal as for-profit organizations (Carvalho et al., 2017; Behn et al., 2010). However, the most important argument for non-profit organizations into voluntary disclosure is demonstrating their responsibility and performance (based on a mission), which are key components of their accountability (Saxton et al., 2012).

Several motivations towards voluntary disclosure are discussed. These can also can be motivations for healthcare organizations to publish information voluntarily. Foundations are not required to publish additional information in the form of a management report; however private of public limited companies are. In addition, for foundations voluntary disclosure could also be beneficial (Deegan, 2002; Sarkar & Bhattacharjee, 2017; Land & Lundholm, 1993; Bayer & Guttman, 2012). Since in the Netherlands pressure and uncertainties exist in healthcare and customers are critical when choosing a healthcare organization, healthcare organizations can create ‘a good brand name’ by the disclosure of voluntary information. Next to that, other motivations towards voluntary disclosure, as documented by Deegan (2002) or Tian and Chen (2009) for example, are possible. Therefore the first hypothesis is:

Hypothesis 1: The majority of Dutch healthcare organizations engage in voluntary disclosure.

3.4 Institutional theories: definition and streams

This study relies on institutional theories that have also been used in previous research. Institutional theories applied to voluntary disclosure suggest that organizations have different incentives for voluntary disclosure. First, the concept institutional theories is defined.

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Institutional theories.

Institutional theory provides a theoretical basis for exploring social mechanisms. Institutionalism takes the processes into account so that structures of norms, routines and rules develop into guidelines for social behavior. As a consequence, organizations become similar and institutionalism examines how the aforementioned elements are created, recorded and adjusted (Burns & Scapens, 2000). In the literature, a distinction between new institutional economics (Walker, 1998), old institutional economics (Scapens, 1994) and new institutional sociology (Carruthers, 1995) is made. These different streams have in common the conviction that organizations do not stand alone, but that they have to take into account the context of institutional arrangements and social processes. New institutional sociology is most relevant to this research and focuses on the association between the structure of the organization and the broader social environment in which the organization operates (Carruthers, 1995). The perspective of new institutional sociology tries to explain how organizational behavior is the result of internal and external institutions (Hussain & Hoque, 2002).

In the past few years, the interest in institutional theories has been expanded (Scott, 1995). Institutional theory has become important, particularly by the explanation and comprehension of continuity and change in organizations (Ashworth et al., 2007). It could be regarded as a development of ‘open system’ views of organizations (Pfeffer & Salancik, 1978). For example, DiMaggio and Powell (1983) use institutional theory to gain insight into various aspects of behavior of non-profit organizations. In the following sections, isomorphism and contingency theory are examined. Isomorphism states that organizations change because they duplicate each other in order to become legitimate. Isomorphism is included to study whether organizations feel pressure, to become uniform with other organizations. Contingency theory is included to prove whether there are differences between branches. As a result, voluntary disclosure might cause legitimacy and transparency.

3.5 Isomorphism

Why should organizations engage in voluntary disclosure in their financial reporting? One reason can be due to their own conviction. Another reason could be due to the pressure of outside factors like the professional group or media (Nie et al., 2016). When this is the case, it is called isomorphism. Isomorphism covers equality of processes or structures between organizations. This equality stems from mutual imitating organizations or independent developments in organizations – the past ones, for example (Claeyé & Jackson, 2012). Institutional theory refers to three different influences: coercive, mimetic, and normative isomorphism.

Coercive isomorphism

is defined by DiMaggio and Powell (1983) as “the result from both formal and informal pressures exerted on organizations by other organizations upon which they are dependent’’ (p. 150). In relation to this type of isomorphism, several studies emphasize the importance of the legal environment in the disclosure and auditing of information (Francis et al., 2011; Garcia-Sanchez et al., 2015; Zhou et al., 2013).

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Mimetic isomorphism

is defined by DiMaggio and Powell (1983) as “achieving conformity through imitation’’ (p. 151). Imitation can take place for example by copying competitive organizations. Haunschild and Miner (1997) distinguished three common types of mimetic isomorphism, namely based on frequency, trait and outcome.

Normative isomorphism

is associated with professionalism (DiMaggio & Powell, 1983). Professionalization is defined by DiMaggio and Powell (1983) as “the collective struggle of members of an occupation to define the conditions and methods of their work, to control "the production of producer", and to establish a cognitive base and legitimation for their occupational autonomy’’ (p. 152). Two features of professionalization are essential origins for normative isomorphism, according to DiMaggio and Powell (1968): 1) “the resting of formal education and of legitimation in a cognitive base produced by university specialists, 2) the growth and elaboration of professional networks that span organizations and across which new model diffuse rapidly’’ (p. 152).

The second chapter described the pressure and uncertainty different healthcare organizations have to cope with in order to fulfill new law and legislation, expectations of society and other stakeholders. Dutch healthcare is constantly changing, which ensures more pressure. As of 2015, several new law and shifts have taken place (Wlz, Wmo, and Youth Law) which causes more pressure. Before 2015, it was a quieter period because there are even more law and legislation and stakeholders have higher expectations over time. It is therefore likely that organizations imitate each other (in cases of voluntary disclosure) in order to cope with external pressures, and thus mimetic isomorphism will exist over time (Petty, 1997). Prior research of Petty and Cuganesan, (2005) also finds that companies in Hong Kong show more voluntary disclosure over time. Therefore the second hypothesis is:

Hypothesis 2 (mimetic isomorphism): Dutch healthcare organizations show more voluntary disclosure over time.

Auditors.

As mentioned in chapter two of this paper, Dutch healthcare organizations organized as foundation are required to have an external auditor (Book 2, Article 393 ‘Burgerlijk Wetboek’) who issues an audit opinion with respect to the annual, financial statements. External audits could be seen as a type of coercive isomorphism (Verbruggen et al., 2011) because legislation requires it. Not much research is done to the association between audit firm and the extent of disclosure. However, results in research according to IFRS disclosure demonstrate compliance is greater when reports are audited by a large audit firm (Glaum & Street, 2008; Hodgdon et al., 2009). For example, Buuren (2008) focuses on differences in annual reports and disclosures when audited by BIG4-firms (EY, Deloitte, KPMG, PWC) and finds disclosure differences between organizations. Besides that, Inchausti (1997) shows that larger accounting firms place higher demands on voluntary disclosure as a result of, for example, reputational damage. In addition, following legitimacy theory, organizations can create an emotive symbol: it

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distracts the attention of the stakeholders from how the organization actually behaves; it is not from the intrinsic motivation of the organization, to really do something well (An et al., 2011). From this reasoning, voluntary disclosed information could be seen as an emotive symbol. Thereafter, if the organization requests the accountant to provide a declaration of demonstration of the report, this declaration could increase the value of the report to the outside world. Because voluntary disclosure is related to the size of an audit firm in previous research and organizations can voluntary disclosure use as emotive symbol, I expect a positive relationship between the extent of voluntary disclosure and an external BIG4-audit firm. The third hypothesis therefore is:

Hypothesis 3 (coercive isomorphism): There is a positive relationship between annual reports audited by a BIG4-audit firm and their voluntary disclosure score.

3.6 Contingency theory

According to contingency theory, no organizational structure is effective for all organizations. Optimal effective management depends on distinctive features of any circumstance (Elsayed & Hoque, 2010). Lawrence and Lorsch (1967) determined external influences and the environment in which the organization acts as important factors in an effective, internal organizational process. Effective management should be reached by adjusting to organizational features, the so-called contingency factors (Beldhuis & Olde Engberink, 2017). Since the decision to disclose information is a result from an internal process, based on Lawrence and Lorsch (1967), such a decision is influenced by external uncertainties. In the current literature, most contingency factors that result from contextual variables and/or the external environment are included (Chenhall, 2003). The most widely researched aspect of the environment is uncertainty, since uncertainty has a widely influence on organizational structure and, as a result, the environment sometimes is unpredictable (Chenhall, 2003). Therefore, uncertainty as contingency factor is also included in this research. Other contingency factors are for example turbulence, diversity, complexity and dynamism (Khandwalla, 1977). The contingency factor of external pressure results from and overlap with this, so it is therefore used in this research.

Uncertain environmental circumstances.

Uncertainty in environmental circumstances is the first contingency factor included into this research. Environmental circumstances positively affect the extent to which the management does voluntary disclosure. These circumstances include, among others, global competition and market uncertainty (Elsayed & Hoque, 2010). Because VVT-organizations have the highest risk of bankruptcy as a consequence of the many liquidations and much competition in that branch. The other branches studied also have uncertain circumstances, although in a lesser extent – GGZ-organizations, which are funded by many stakeholders, contrary to other branches, for example.

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External pressure.

The sectors that are being studied during this research are face (external) pressure. Pressure could have a positive influence on the disclosure of voluntarily information (Chen et al., 2008). Therefore pressure is the second contingency factor. External pressure is higher for organizations which deliver long-term care (Nies, 2012). Their environment is uncertain due to demographic and technology changes and they feel pressure to deliver high quality care. Long-term care is delivered the most by VVT-organizations and hospitals and in a lesser extent by GGZ-organizations. Since the branches being studied are different (size, funding, legislation, pressure, uncertainty), they react differently on societal pressure and external uncertainty and disclose information voluntarily in varying degrees. Hence, the hypothesis that results from this is:

Hypothesis 4: The different branches being studied reveal various voluntary disclosure scores.

This hypothesis can be divided into two specific hypotheses, focused on the differences between the branches into the contingency factors of uncertainty and external pressure (on the basis of the abovementioned - and information mentioned in chapter 2):

Hypothesis 4a: VVT-organizations reveal the highest voluntary disclosure scores in comparison with hospitals and GGZ-organizations in the years being studied.

Hypothesis 4b: GGZ-organizations reveal the lowest scores in comparison with VVT-organizations and hospitals in the years being studied

.

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IV. RESEARCH DESIGN

In this chapter, the methodology of this research is described in order to answer the research question formulated in the introduction of this paper. Research in institutional theories has been conducted to find possible explanations of voluntary disclosure in Dutch healthcare organizations. This research focuses on strategic and financial related voluntary information. Research is done in three Dutch healthcare branches. In the first section the method of this research is described. After that, there is a description of how the sample has been determined. Subsequently, the measurement of voluntary disclosure, the independent and control variables is given. In the fifth section the measurement of the hypothesis is described. In this section, also the research model per hypothesis is developed.

4.1 Research Method

This research has been carried out quantitatively by the use of hand-collected data of the annual accounts from Dutch healthcare organizations. This research is on a quantitatively basis because the research question central to this paper implies numerical/statistical information in response, based on facts. This information can only be obtained by the use of quantitative research. Voluntary disclosure is best measureable from fact-based data in annual reports of organizations. By using quantitative research, the results can easily be expressed in models and charts.

4.2 Sample and Period

All healthcare organizations in the Netherlands for which the WTZi is applicable (the WTZi applies to the three branches in this study) have to publish their annual report each year (before the first of June of the following year) on www.jaarverantwoordingzorg.nl. On this website, data is available for the years 2000-2017 (however, not everything is published for 2017 at the time of this research) via the archive DigiMV. Annual reports of 5800 VVT-organizations, 321 hospitals and 1600 GGZ-organizations are available.

This paper studies the voluntary disclosure scores of the years 2012 and 2016. These years are used because it is a significant period for Dutch healthcare organizations. From 2012, many new regulations were introduced – among others, DBC, whereby hospitals should be more transparent. Furthermore, 2012 is an important year for Dutch healthcare organizations organized as foundation, because the publication of a management report/social report was no longer required after this year. Information in the management report/social report therefore is only on a voluntarily basis as of 2012. Next to this fact, 2012 is a good starting point because the financial crisis was then already over. To do research into voluntary disclosure over time, an interim period of three years was chosen. The expectation is that the change in voluntary disclosure can be viewed well in this timeframe of three years. Besides that, 2016 is the last year in which all data is available, because data covering the year 2017 is due by 1 June 2018

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(before this date, all data was collected).

The sample for this research is selected from Dutch healthcare organizations that operate in three different branches. The purposive sample method is used. The characteristics of the purposive sample are that the annual report should be available on www.jaarverantwoordingzorg.nl, that the organization is a foundation and that the organization is not merged/acquisitioned in the years being studied. The sample therefore consists of organizations with different sizes and from different regions in the Netherlands. A good sample should be a compromise of a too small sample (whereby the effect cannot be measured due to too little observations) and a too large sample (waste of time and money) (Noordzij et al., 2011). In addition, a sample should be representative (Hox, 1998). A representative sample for a finite population could be calculated from the following formula:

! > $ × &'× ((1 − () &'_{× ((1 − () + ($ − 1) × .}'

` (Formula 1)

Wherein:

n = number of required observations

z = the standard deviation of a certain reliability percentage (almost always used 1.96 {95% reliability}) N = size of the whole population

p = always 50%

F = the error rate (almost always 5%)

To satisfy this formula, the number of required observations per year is 1692 (N=7721, F=0.05). However, this number is not fully representative, because this formula calculates a representative sample from the whole population (all VVT-organizations, hospitals and GGZ-organizations in the Netherlands). Moreover, the number of required observations contains also organizations not organized as foundation, organizations for which no data is available and organizations merged or acquisitioned during the years being studied. A representative sample of 1692 organizations means 564 per branch. In the Netherlands, there are only 321 hospitals. In addition, reviewing so many annual reports is not possible within the time available to this thesis and encompasses much time and work. That is why I have chosen to meet a sample of 90 healthcare organizations (30 per branch), which was the maximum possible sample size within the limited time and resources available. A proportional sample is chosen, because all branches studied are equally important. In Appendix A, an overview of the organizations included in the sample is given.

Data for the dependent, independent, and control variables has been collected from the annual documents of healthcare organizations. The independent and control variables’ data was hand-collected from the financial statements (balance sheet and income statement). Data for the dependent variable was extracted from the yearly report/social report. Altogether, I went through 90 annual documents and 90

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yearly reports/social reports to collect all the necessary data. Ultimately, all hand-collected data has been gathered in a self-developed Excel sheet, after which it was transported to SPSS Statistics 25, a data analysis and software program to perform analysis and graphics.

4.3 Dependent Variable: Voluntary Disclosure

In the voluntary disclosure literature, researchers use different proxies to measure the amount of voluntary disclosure, including management forecasts, analysts’ presentations, external scores, self-developed scores or indexes. Additionally, information can be disclosed across several communication sources such as media, websites, letters to shareholders, newspapers and so on (Shehata, 2014). The amount of voluntary disclosure for Dutch healthcare organizations in this research is measured by the use of content analysis, which implies an analysis of the content of annual reports of organizations. The content of these annual reports is used as a resource of voluntary disclosure based on strategic and financial information. To measure the amount of voluntary disclosure, several voluntary disclosure items are included in order to determine a final voluntary disclosure score. The items are based on prior research with some additions specifically developed in the Dutch context and converted into binary scores (with value 0 or 1). The total index consist of 39 items (See Appendix B for the established index), divided into four categories. ‘Strategy on General’ consist of several items related to general and strategic information of the organization (both current and in the future). For example, does the organization give a brief history? Or what is the current strategy of the organization in the financial field? This category and its corresponding items are also used by Charumathi and Ramesh (2015); Eng and Mak (2003) and Meek et al., (1995). The second category, ‘Risk and uncertainties,’ consists of several items based on the risk management of the organization. This category incorporates possible descriptions, insights in mitigations, impact and effects of potential risks/uncertainties on a strategic, operational, financial and legislative field. Before 2012, these items were required to publish in the yearly report/social report of Dutch healthcare organizations (RJ 400, 2012). Therefore, it is interesting to research if Dutch healthcare organizations still disclose these items after 2012. The third category consists of other financial information (which are not items from the financial statements, yet disclosed in the yearly report/social report). This category consist, among others, of financial history and several ratios. This category is also used in prior studies (Charumathi & Ramesh, 2015; Eng & Mak, 2003; Meek et al., 1995) and is combined in this research to a suitable category for Dutch healthcare organizations. The fourth category is named ‘Forward-looking statements’ and consist of predictive items such as a statement of future prospects and a quantitative forecast of patients. This category is also based on and combined from the papers of Charumathi and Ramesh (2015); Eng and Mak (2003) and Meek et al., (1995). For each company of the sample, the amount of voluntary disclosure is calculated and transformed into a final score. Thus:

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Voluntary Disclosure Score for a Dutch healthcare organization =

/01234 56 758/9: 6451 ;5<0/9=4> ?8:@<5:043 A/B3C DE (959=< /01234 56 8931: 8/ 9F3 8/B3C)

4.4 Independent Variables

Three independent variables were included in this research: time, auditor and branch. In Table 2 at the end of this section, the list of variables, their definitions and measurements is given

.

Time.

When organizations imitate each other over time, more voluntary disclosure over time results. Therefore, time is included in this research as an independent variable. In doing so, patterns of voluntary disclosure in a timeframe of four years (between 2012 and 2016) are studied.

Auditor.

According to prior research and to use of a possible emotive symbol, it is likely that a BIG4-auditor (Deloitte, EY, KPMG or PwC) has a positive effect on the amount of voluntary disclosure of a Dutch healthcare organization. To test this, auditor choice is included in this research as an independent variable.

Branch.

Because Dutch healthcare branches are different and have to cope with different contingency factors, a logical consequence is that they reveal different voluntary disclosure scores. Therefore, the branch of a Dutch healthcare organization is included as an independent variable.

Table 2 List of Dependent and Independent Variables and Measurements.

Dependent Variable

Voluntary Disclosure Score (VDSCORE) (Total number of points based on the Voluntary Disclosure Index divided by 39)*100%

Independent Variables

Auditor choice (BIGF) Coded as 1 if the auditor is a BIG4 firm, otherwise 0 Voluntary Disclosure Score 2012 (YR12) Coded as 1 if the score is for the year 2012, otherwise

0

Voluntary Disclosure Score 2016 (YR16) Coded as 1 if the score is for the year 2016, otherwise 0

VVT-score (VVT) Coded as 1 if the score is for a VVT-organization, otherwise 0

Hospital-score (HOSP) Coded as 1 if the score is for a hospital, otherwise 0 GGZ-score (GGZ) Coded as 1 if the score is for a GGZ-organization,

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4.5 Control Variables

Most previous research doing research into voluntary disclosure take into account different control variables. In prior researches there is an account of size, industry, age, profitability, leverage, dividend payment, country of origin, legal system, accountants cluster, audit, and professional (Meek et al., 1995; Barton & Waymire, 2004; Qu et al., 2013; Hossain et al., 2005; Charumathi & Ramesh, 2015; Van den Brand, 2007; Inchausti, 1997). The control variables of size, age and profitability are the best known and are used most often. This study controls for size and profitability, since these are likely to have an influence on the dependent variable. Age is not used in this research because the year of establishment was not always available in the year documents of Dutch healthcare organizations. Therefore, it was decided not to control age. The control variables and their measurement are summarized in Table 3 at the end of this section.

Size.

The first control variable included in this research is size of the organization. Prior studies into for-profit organizations (Barako et al., 2006; Charumathi & Ramesh, 2015) have proved that larger organizations show a larger amount of voluntary disclosure in their voluntary disclosure scores. Larger organizations have more essential resources at their disposal, such as knowledge, experience and financial resources. Therefore, it is assumed that the amount of voluntary disclosure is higher for larger healthcare organizations. Size can be measured in several ways: total assets (Behn et al., 2010; Carvalho et al., 2017), the natural logarithm of revenues (Saxton et al., 2012) or staff number (Damanpour, 1992).

For hospitals, size is often measured by total number of beds. Since this research also explores other branches that do not have beds (for example some GGZ-organizations), this is not a good standard. In the second chapter of this paper, the size of the different branches is measured by total revenues and amount of organizations per branch. However, the objective of a Dutch healthcare organization is not to make as much as revenues; therefore, size of a particular organization within a specific branch is measured by total assets (Barton & Waymire, 2004). Specifically, for the measurement of size (by measuring total assets), the natural logarithm was calculated. This is important to continuous variables because after the natural logarithm a normal distribution results. Hereby, results are affected in a lesser extent by peaks in size.

Profitability.

In accordance with prior research, profitability is included as control variable (Qu et al., 2013; Hossain et al., 2005; Charumathi & Ramesh, 2015). More profitable organizations feel the pressure to meet expectations, norms and values from society to explain and justify why they make the profit, and to enable them to assess if that organization acts legitimately (Bewley & Li, 2000; Islam & Deegan, 2010). Therefore, profitable organizations engage more in voluntary disclosure. In addition, there is more money available for voluntary disclosure in the case of profitable organizations (Brammer & Millington, 2006). Voluntary disclosure is funded by profits, incurred by the organization. Based on

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the above-mentioned reasons, more profitability would lead to a higher amount of voluntary disclosure. Profitability is measured by Return on Equity (ROE), like in previous research (Alsaeed, 2006; Eng & Mak, 2003).

Table 3 List of Control Variables and Measurements.

Control Variables

Organizational size (SIZE) Sum of total assets at 31-12 in € Natural Logaritm of Totals Assets to measure

Organizational size (LOGTA)

The natural logarithm of total assets at 31-12

Profitability (PROF) Profit divided by equity capital at 31-12

4.6 Testing Hypotheses and Model Development

The first hypothesis searches evidence for voluntary disclosure at the majority of Dutch healthcare organizations. To test this hypothesis, the voluntary disclosure scores for each of the organizations in the sample is compared. Different descriptive statistics are used to test this hypothesis, since this hypothesis is descriptive without an independent variable.

The second hypothesis searches evidence for more voluntary disclosure over time at Dutch healthcare organizations. A linear regression-analysis was performed to test if the hypothesis can be assumed. To test this, a dummy variable was necessary. For the scores of 2012, these corresponds to a 1; otherwise it is coded as 0. It is done vice versa for 2016. A linear regression is used to determine how much the independent variable can explain the variation of the dependent variable, and thus the influence of time on the variation of the voluntary disclosure score. To test this hypothesis, an independent sample t-test is also used. For this test, 2 groups (2012 and 2016) are made. In addition, descriptive statistics are used. The following model results from this:

GHIJKLM = O_P+ O_Q RL16 + O_' TKUVW + O_DXLK. + Y

The third hypothesis searches evidence for the positive influence of a BIG4-audit firm and voluntary disclosure. To find evidence for this hypothesis, regression-analysis, an independent samples-t-test and descriptive statistics are used. The regression-analysis explores whether there is an association between a BIG4-audit firm and voluntary disclosure, and if so, whether the relation is positive or negative. For this hypothesis, auditors of the different organizations in the sample are collected. This is also to be done by using a dummy variable, coded as a 1 if the auditor is a BIG4-audit firm (Deloitte, EY, KPMG or PwC) and as a 0 if otherwise. The following regression model results from this:

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The fourth hypothesis searches evidence for various voluntary disclosure scores among the different branches being studied. To find evidence, a linear regression and ANOVA analysis is used in combination with descriptive statistics. To test this hypothesis, dummy variables were used whereby the coding was 1 if the organization operates in the VVT-branch, and 0 if otherwise. This was carried out in the same way for organizations in the hospital and GGZ-branch. The ANOVA analysis is able to compare two or more groups with each other, based on means. After this analysis, a post hoc test is carried out to examine the ranking (hypothesis 4a/4b). After both analyses, the differences in voluntary disclosure behavior come forward among VVT-organizations, hospitals and GGZ-organizations. The following regression model results from this:

GHIJKLM = OP+ OQGGV + O' UU\ + OD TKUVW + O]XLK. + Y

Nevertheless, for the sake of completeness and to test for mutual relationships, an additional test is used to measure all variables in one model. For this additional test, a linear regression is used. The following regression model results from this:

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V.

RESULTS

In this chapter, an overview of the analysis and corresponding results is derived. In the first section, the adjustments required to provide a suitable dataset were outlined. The second section covers the descriptive statistics and a check for multicollinearity. The third section provides the results from testing the hypotheses, followed by a conclusion to accept/reject the hypotheses. This chapter ends with a robustness check.

5.1 Adjustments in dataset

All data was hand-collected using annual reports of Dutch healthcare organizations. Data is collected from www.jaarverantwoordingzorg.nl and is assumed to be reliable, given its primary sources (original data). Prior to the analyses for testing the hypotheses, data is checked to increase reliability and validity. Firstly, data was checked by means of winsorizing. Winsorizing can be used to detect outliers in the data. The effect of outliers should be as limited as possible, because they can weaken the relation between the dependent and independent variables. Skewness and Kurtosis (K/S) checks were performed to test the distribution of the data in comparison with the normal distribution. K/S values should be between -3 and 3. This analysis can be found in Appendix C. The result of this analysis shows that values of profitability (PROF) have significantly high values. Therefore outliers of PROF were detected and winsorized by the mean (+ and – 3 times the standard deviation). An overview of the PROF-values among the observations is given in Appendix D1. In Appendix D2, the new values of K/S of PROF are shown. The new Skewness value is now between -3 and 3. However, the new Kurtosis value is 8,151, still something too high but acceptably smaller (it went from 47,857 to 8,151). I decided to continue this data.

5.2 Descriptive statistics and multicollinearity

The descriptive statistics regarding the variables included in this research are shown in Table 4 and serve as a summary of the data used to test the hypotheses later on. The included descriptive statistics included are the number of observations (sample size), the mean, standard deviation and the minimum and maximum values.