Debt issuance incentives and creative accounting: Evidence from municipal mergers in Japan

IF 2.6 3区 经济学 Q1 ECONOMICS Journal of the Japanese and International Economies Pub Date : 2023-06-01 DOI:10.1016/j.jjie.2023.101259
Tsuyoshi Goto , Genki Yamamoto
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Abstract

Creative accounting has been a considerable problem in the field of governance and has caused serious economic issues. However, how governments determine the scale of creative accounting is unknown in the existing literature.

We study whether a difference in the usage and the scale of creative accounting is determined by the intensity of the incentive to issue excessive debt. To study this, we focus on municipal mergers, a well-known setting wherein smaller merging municipalities have a stronger incentive to enjoy freeriding and issue debt since the debt burden will be shared and mainly owed by larger merging municipalities. This setting enables us to use the relative population size as a continuous treatment representing the strength of debt issuance incentives, whereas existing papers focused on binary treatments. Utilizing the data of Japanese municipal mergers, we find that governments with small relative populations, which have a strong debt issuance incentive, employed creative accounting more intensively than others. Moreover, we investigate how governments used the money obscured through creative accounting for the first time and find that it was not used to overcome financial difficulties nor increase politicians’ pecuniary gains but to increase resident welfare.

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债务发行激励和创造性会计:来自日本市政合并的证据
创造性会计一直是治理领域的一个重大问题,并引发了严重的经济问题。然而,政府如何确定创造性会计的规模在现有文献中是未知的。我们研究了创造性会计的使用和规模的差异是否由发行过度债务的激励强度决定。为了研究这一点,我们将重点放在市政合并上,这是一个众所周知的环境,在这个环境中,较小的合并市政当局更有动力享受搭便车和发行债务,因为债务负担将由较大的合并市政政府分担,并主要由其承担。这种设置使我们能够使用相对人口规模作为代表债务发行激励力度的连续处理方法,而现有的论文侧重于二元处理。利用日本市政合并的数据,我们发现相对人口较少、债务发行动机较强的政府比其他政府更密集地使用创造性会计。此外,我们首次调查了政府如何使用通过创造性会计掩盖的资金,发现它不是用来克服财政困难,也不是用来增加政客的金钱收益,而是用来增加居民福利。
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来源期刊
CiteScore
5.10
自引率
6.90%
发文量
36
期刊介绍: The Journal of the Japanese and International Economies publishes original reports of research devoted to academic analyses of the Japanese economy and its interdependence on other national economies. The Journal also features articles that present related theoretical, empirical, and comparative analyses with their policy implications. Book reviews are also published.
期刊最新文献
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