Abstract
PurposeThis 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/approachA 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.FindingsWe 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/valueOur 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.
Highlights
As a part of the New Public Management movement, a private management technique, Organization for Economic Co-operation and Development (OECD) countries strengthened their public service efficiency, effectiveness and accountability (Gray and Jenkins, 1993; OECD, 1993; Hood, 1995)
We investigate whether non-financial and accrual-based cost information is employed in the budgeting process as well as the role of financial constraints in their relationship
In Group 3, utilization of accrual-based cost information was higher than in Group 4, and utilization of the performance measures was higher than in Group 2, implying that, if we provide both accrual-based cost information and performance measures, budget officers will increase their usage of each information type [14]
Summary
As a part of the New Public Management movement, a private management technique, Organization for Economic Co-operation and Development (OECD) countries strengthened their public service efficiency, effectiveness and accountability (Gray and Jenkins, 1993; OECD, 1993; Hood, 1995). Many public sector organizations initiated outcome-based evaluations of programs and projects using non-financial performance information for budgeting (Brignall and Modell, 2000; Lapsley and Wright, 2004; Ter Bogt et al, 2015). In. JEL Classification — H7, H11, H72, H75, M41, M49 © Makoto Kuroki and Katsuhiro Motokawa. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode
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