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Do non-financial performance and accrual-based cost information affect public sector budgeting?

Author

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  • Makoto Kuroki
  • Katsuhiro Motokawa

Abstract

Purpose - This study aims to provide evidence of how budget officers use non-financial and accrual-based cost information in the budgeting process and how the usage of this information is influenced by financial constraints. Design/methodology/approach - A randomized survey-based field experiment investigating budget officers in 546 Japanese local governments (LGs) was conducted. This allowed us to identify the budget officers' decision-making in the public sector budgeting process by creating and analyzing primary data with regression models. Findings - We found that budget officers suppress budget amounts based on non-financial information of good performances. Under fiscal constraints, officers further reduce budget amounts using information on high accrual-based costs and poor non-financial performance. Originality/value - Our survey-based field experiment allowed us to obtain primary data from officers making budget decisions. To the best of our knowledge, this study provides the first evidence that non-financial good and poor performance information and accrual-based cost information affect budget officers' decision-making under financial constrain.

Suggested Citation

  • Makoto Kuroki & Katsuhiro Motokawa, 2021. "Do non-financial performance and accrual-based cost information affect public sector budgeting?," Journal of Public Budgeting, Accounting & Financial Management, Emerald Group Publishing Limited, vol. 34(6), pages 95-116, November.
    • Handle: RePEc:eme:jpbafm:jpbafm-03-2021-0056
    DOI: 10.1108/JPBAFM-03-2021-0056
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    More about this item

    Keywords

    Japan; Local government; Non-financial performance information; Accrual-based cost; Budgetary information; Survey-based field experiment; H7; H11; H72; H75; M41; M49;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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