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The financial health of Australian universities: policy implications in a changing environment

Author

Listed:
  • Helen Irvine
  • Christine Ryan

Abstract

Purpose - In the context of the Australian Government’s attempts to impose budget austerity measures on publicly funded universities in its higher education sector, the purpose of this paper is to assess the sector’s financial health. Design/methodology/approach - The multi-dimensional study is based on seven years of government financial data from all 39 publicly funded Australian universities, supplemented by information from universities’ annual reports. Using a financial health model that reflects vulnerability, viability and resilience, the authors examine sector data using a suite of metrics. The authors analyse differences between those universities in the Top 10 and Bottom 10 by revenue, as a window into the financial health of the sector at large. Findings - While mostly financially viable, the sector shows signs of financial vulnerability, particularly in the areas of expense control and financial sustainability. Possibly in response to an uncertain funding environment, universities are managing long-term liquidity by growing reserves. Debt represents largely untapped potential for universities, while differences between the Top 10 and Bottom 10 universities were most evident in the area of revenue diversity, a strong predictor of financial viability. Research limitations/implications - Focussing on a specific set of financial metrics limits the scope of the study, but highlights further research possibilities. These include more detailed statistical analysis of data, financial case studies of individual universities and the implications of revenue diversification on academic standards. Originality/value - The paper contributes to higher education literature, providing empirical evidence of universities’ finances. It highlights the importance of universities’ financial resilience in an uncertain funding environment.

Suggested Citation

  • Helen Irvine & Christine Ryan, 2019. "The financial health of Australian universities: policy implications in a changing environment," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 32(5), pages 1500-1531, August.
  • Handle: RePEc:eme:aaajpp:aaaj-03-2018-3391
    DOI: 10.1108/AAAJ-03-2018-3391
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    Citations

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    Cited by:

    1. Juan Alejandro Gallegos Mardones & Jorge Andrés Moraga Palacios, 2023. "Chilean Universities and Universal Gratuity: Suggestions for a Model to Evaluate the Effects on Financial Vulnerability," Sustainability, MDPI, vol. 15(13), pages 1-21, June.
    2. James Guthrie & Martina K Linnenluecke & Ann Martin‐Sardesai & Yun Shen & Tom Smith, 2022. "On the resilience of Australian public universities: why our institutions may fail unless vice‐chancellors rethink broken commercial business models," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(2), pages 2203-2235, June.
    3. Garry D. Carnegie & Ann Martin-Sardesai & Lisa Marini & James Guthrie AM, 2021. "“Taming the black elephant”: assessing and managing the impacts of COVID-19 on public universities in Australia," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 30(6), pages 1783-1808, October.

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