Determinants of Financial Reporting Quality in the Public Sector: Evidence from Indonesia

IF 2 Q2 BUSINESS, FINANCE International Journal of Accounting Pub Date : 2019-10-09 DOI:10.1142/s1094406019500094

Fu'ad Rakhman, Singgih Wijayana

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引用次数: 6

Abstract

Most studies addressing the issue of financial reporting quality (FRQ) focus on corporations. This study investigates the determinants of FRQ in the public sector. We use the type of audit opinion as a proxy for reporting quality, with an unqualified opinion representing the best reporting quality while a disclaimer of opinion represents the worst quality. Using manually collected data from 3018 financial reports of local governments in Indonesia from 2008 to 2014, we find that a high proportion of capital expenditures in the total budget is associated with low FRQ. Further, we find that larger and wealthier local governments are associated with higher FRQ. Finally, we find that local governments under more experienced mayors have higher reporting quality. Our results are robust to different measures of FRQ. This study contributes to the reporting quality literature by providing empirical evidence on the determinants of FRQ in the public sector, which has been relatively underexplored. We conclude that certain characteristics of local governments and of mayors are associated with the types of audit opinion and that financial incentives accelerate the improvement of reporting quality.

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公共部门财务报告质量的决定因素：来自印度尼西亚的证据

大多数关于财务报告质量问题的研究都集中在公司身上。本研究调查了公共部门FRQ的决定因素。我们使用审计意见的类型作为报告质量的代理，无保留意见代表最好的报告质量，而免责意见代表最差的报告质量。通过人工收集印尼地方政府2008年至2014年3018份财务报告的数据，我们发现资本支出在总预算中所占比例较高，其FRQ也较低。此外，我们发现更大、更富裕的地方政府与更高的FRQ相关。最后，我们发现经验更丰富的市长领导下的地方政府报告质量更高。我们的结果对不同的FRQ测量都是稳健的。本研究通过提供有关公共部门FRQ决定因素的经验证据，为报告质量文献做出了贡献，这方面的研究相对较少。我们得出结论，地方政府和市长的某些特征与审计意见的类型有关，财政激励加速了报告质量的提高。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

International Journal of Accounting BUSINESS, FINANCE-

CiteScore

1.20

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0.00%

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期刊介绍： The aim of The International Journal of Accounting is to advance the academic and professional understanding of accounting theory, policies and practice from the international perspective and viewpoint. The Journal editorial recognizes that international accounting is influenced by a variety of forces, e.g., governmental, political and economic. Thus, the primary criterion for manuscript evaluation is the incremental contribution to international accounting literature and the forces that impact the field. The Journal aims at understanding the present and potential ability of accounting to aid in analyzing and interpreting international economic transactions and the economic consequences of such reporting. These transactions may be within a profit or non-profit environment. The Journal encourages a broad view of the origins and development of accounting with an emphasis on its functions in an increasingly interdependent global economy. The Journal also welcomes manuscripts that help explain current international accounting practices, with related theoretical justifications, and identify criticisms of current policies and practice. Other than occasional commissioned papers or special issues, all the manuscripts published in the Journal are selected by the editors after the normal double-blind refereeing process.