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

Makoto Kuroki and Katsuhiro Motokawa

Journal of Public Budgeting, Accounting & Financial Management, 2021, vol. 34, issue 6, 95-116

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.

Keywords: Japan; Local government; Non-financial performance information; Accrual-based cost; Budgetary information; Survey-based field experiment; H7; H11; H72; H75; M41; M49 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jpbafm:jpbafm-03-2021-0056

DOI: 10.1108/JPBAFM-03-2021-0056

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