Do Accrual-based Financial Statements Improve Local Public Sector Efficiency? Evidence from Japan

Kondoh, Haruo and Ogawa, Akinobu (2023): Do Accrual-based Financial Statements Improve Local Public Sector Efficiency? Evidence from Japan.

Abstract

After international organizations such as The Organisation for Economic Co-operation and Development (OECD) advocated for national governments to adopt accrual accounting, the number of countries that switched from traditional cash-based accounting to accrual accounting or amended former cash-based accounting is increasing. This change in the accounting system is referred to as the New Public Management (NPM). One of the core elements of NPM is enhancing budget transparency, efficiency, and accountability of decision making using business-like management tools such as the double-entry bookkeeping method. This study examines the impact of the “local public account revolution” on the efficiency of Japanese local governments using a stochastic frontier approach and panel data. We present evidence that preparing business-like financial statements may increase the efficiency of local governments.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial statements, Accrual accounting, Efficiency, Fiscal transparency, New public management (NPM)
• Subjects: H - Public Economics > H1 - Structure and Scope of Government; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations

References

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