Budget Rules and Flexibility in the Public Sector: Towards a Taxonomy

The practices and norms of public budgeting have often been seen as a brake on the flexibility needed of government organisations. This remains true despite historically significant financial management reforms designed around budgetary devolution. Seeing flexibility as operating along two dimensions – devolution and discretion – this paper revisits the underlying features of traditional public budgeting to develop a taxonomy of six generic ‘budget rules’. By isolating key properties of budget control, the paper uses two of the more prominent rules – annuality and purpose – to illustrate how the rules interact to generate control capacity, as well as the scope for rule variability in promoting increased flexibility.     

US Fiscal Sustainability and the Causality Relationship between Government Expenditures and Revenues: A New Approach Based on Quantile Cointegration

This paper first aims to reinvestigate the issue of US fiscal sustainability by using the quantile cointegration approach proposed by Xiao (2009 and 2012). Our empirical evidence indicates a quantile‐dependent cointegrating relationship between government expenditures and revenues. In addition, this paper examines the long‐run causality relationship between expenditures and revenues by using the vector error‐correction (VEC) model with coefficients based on the different quantiles. Findings from the long‐run Granger‐causality analyses support the spend‐and‐tax hypothesis. Our investigation suggests that the government should show more discretion in increasing expenditures in the long run. Moreover, budget deficit reduction can only be achieved through reductions in government expenditures.     

Capital expenditures and firm performance: evidence from a cross‐sectional analysis of stock returns

Using a simple two‐period model of investment, we show that there should be a nonlinear relation between a firm's investment‐to‐capital ratio and its subsequent stock returns. This prediction finds substantial empirical support. The evidence indicates that the slope of the investment function is negative at low investment levels, close to zero at intermediate investment levels and negative at high investment levels. Our results, which are robust to the use of narrowly‐ and broadly‐defined measures of capital investment, pose a challenge to the hypothesis that the negative cross‐sectional correlation between investment and stock returns is attributable to some sort of overinvestment phenomenon.     

政务微信视角下的政府信任及其提升路径

伴随互联网技术和新媒体的迅猛发展,政务微信已成为政务信息公开透明、多元主体互动参与、公共服务效率改进的新利器.然而,当前政务微信功能定位模糊、运营管理不规范、信息回应不及时等问题影响了政府信任的生成.今后,应明确政务微信的功能定位,改进公共服务效率和效益,改革政务微信管理体制,提升政府信息发布权威性,及时回应公众诉求等...     

Growth Opportunities and Investment Decisions: A New Perspective on the Cost of Capital

This paper shows that it is not always correct to make an upward adjustment to the stock beta in calculating the hurdle rate for capital budgeting even when the project under consideration is riskier than existing assets. The paper also shows that the correct hurdle rate is smaller than the market capitalization rate calculated from the firm's stock beta when the project under consideration has the same risk as existing assets. In addition, it is shown that the market capitalization rate will be an underestimate (overestimate) of the correct hurdle rate when the risk of future assets is greater (smaller) than both the risk of assets in place and that of future capital expenditures. These new results are direct consequences of the insight that the firm's investment opportunities are in fact real call options written on underlying assets.     

New development: Integration of budget and governmental accounting in Mexican states

ABSTRACT

Mexico recently introduced an accounting–budgeting framework compatible with the International Public Sector Accounting Standards (IPSAS). This article discusses the implementation of this framework, including the harmonization of information for the functional, administrative and economic budget categories for all Mexican states and for Mexico City. The author analysed public accounts and budgets prepared under the framework’s information requirements, as well as assessing the harmonization of accounts between the local, state and national levels of government. The results show an increase in both the amount and the harmonization of the public expenditure information being reported. This paper contributes to the literature of harmonization between financial reporting and budgeting processes (Dabbicco, G., & Mattei, G. (2020 Dabbicco, G. , & Mattei, G. (2020). The reconciliation of budgeting with financial reporting: A comparative study of Italy and the UK. Public Money & Management , 1–11. doi: 10.1080/09540962.2019.1708059 [Taylor & Francis Online], [Web of Science ®] , [Google Scholar]). The reconciliation of budgeting with financial reporting: A comparative study of Italy and the UK. Public Money & Management, 1–11).     

人口结构、财政支出刚性对地方政府性债务的影响——基于中国省级面板数据的研究

根据2012年各省级政府地方政府债务数据和1995~2013年省级层面地方政府债务水平的面板数据,运用固定效应模型、差分 GMM 和系统 GMM 模型,考量人口流出比例、老年人口抚养比、财政支出刚性对地方政府债务增长的影响。结果表明：人口流出比例越高、老年人口抚养比越高,财政支出刚性越高,地方政府负债率越高。鉴此,应严格政府举债程序,改变以户籍为导向的财政转移支付政策,理顺各级政府之间的财税关系。     

Forces Leading to the Adoption of Accrual Accounting by the Canadian Federal Government: An Institutional Perspective*/ LES FORCES AYANT MENÉ L'ADMINISTRATION FÉDÉRALE CANADIENNE À ADOPTER LA COMPTABILITÉ D'EXERCICE: UNE PERSPECTIVE INSTITUTIONNELLE

In 1995, the federal government of Canada announced that it would adopt full accrual accounting. The change was fully implemented at the department level in 2001 and for government‐wide financial reporting in 2003. Using the perspective of institutional theory, we examine several factors that had the potential to influence the federal government's decision to adopt full accrual accounting, including two royal commissions, the Office of the Auditor General of Canada, the Canadian Institute of Chartered Accountants, credit markets, and the practices of other national governments. We find that the decision to change to accrual accounting can be largely attributed to coercive and normative influences of the Office of the Auditor General of Canada (supported by the normative influence of the Canadian Institute of Chartered Accountants' Public Sector Accounting Board) and mimetic isomorphism with other members of the federal government's organizational field.     

Budget Development and Use in Small‐ and Medium‐Sized Enterprises: A Field Investigation

We examine the process by which operating budgets are developed and how they are used for control, evaluation, and reward purposes in small‐ and medium‐sized enterprises (SMEs). SMEs (i.e., fewer than 500 employees) represent the dominant organizational form in North America but surprisingly little research has examined how these companies develop and use management controls. Our study focuses on a key element of the management control system, operating budgets, because prior research on SMEs indicates this as an important and commonly used control tool in such companies. Prior research on budgeting practices, while extensive, has almost exclusively examined larger companies. We conduct in‐depth field interviews at 12 participating SMEs to address four theory‐based research questions intended to provide insights regarding the development and use of budgets by SMEs. Our first question examines how budgets are developed, top‐down versus collaborative. Our second, third, and fourth research questions examine, respectively, whether budgets are used tightly or loosely for results control, performance evaluation, and reward purposes. As a first step in providing a deeper understanding of budget development and use in SMEs, our results have implications for practice, theory development, and management accounting education.     

Public Sector Managers Handling Accounting Data: A UK Framework Validated in Spain

A group of Spanish researchers wanted to understand how public sector managers were affected by the accounting systems that provide their data and how such managers used the data at a time when Government policy sought to reduce cash expenditures. The group, who interviewed the managers of seven Galician Business Schools, found that the data was not used but further explanations were difficult. It turned to an Original Framework of 8 UK Issues for public sector managers handling data (Purdy, 1993a). This paper takes the Original Framework, discusses its bases, considers areas for research then introduces the concept of a Continuum of learning related to handling data. Successive amendments to the Framework are made until an Extended Framework of 19 Spanish Issues is produced. These Frameworks are discussed with the interview material. The findings show that the Issues were generally well covered by managers and in the direction anticipated by the Extended Framework indicating some relevance to this Framework. The independently collected material had a close correspondence with the Original Framework and was sufficient for that Framework to become a general research instrument for examining the handling of data by its recipients.     

汇率风险对冲如何影响企业并购行为——基于自由现金流的视角

本文基于2001—2019年上市公司年报中关于外汇衍生品的使用信息,研究发现,使用外汇衍生品的上市公司相比未使用的公司发起并购的概率更低,但并购的市场和经营绩效有所提高。主要原因在于,中国上市公司进行并购通常以企业自有资金进行现金支付,外汇衍生品的使用大幅降低了公司出于预防性动机而持有的现金,从而降低了公司发起并购的概率。此外,进行汇率风险对冲可避免公司因持有大量自由现金流而发生的过度投资行为,从而提高了公司的投资效率。总体而言,使用外汇衍生品进行汇率风险对冲可使上市公司更注重并购质量而非并购数量,从而实现“少而精”的投资策略。本文研究对进一步厘清企业使用外汇衍生品的相关影响提供了一定参考。     

Relating Context Variables to Participative Budgeting and Evaluative Use of Performance Measures: A Meta‐analysis

Extant findings regarding how context variables relate to participative budgeting and the evaluative use of accounting performance measures (APM) are contradictory. Unlike previous reviews of such findings, this empirical article uses a meta‐analysis to examine the relations of context variables with participative budgeting or evaluative use of APM to determine (i) how the variables relate and (ii) which factors might cause between‐correlation variance, such as statistical artefacts or moderating influences of variable measures, sample selection, or industry differences. All meta‐analyses are based on rather small samples. Three groups of context variables emerge. First, some relate significantly and homogeneously to participative budgeting or evaluative use of APM; these direct relations should be considered explicitly in further studies. Second, for some variables, the relations are homogeneous but not significant, such that they are neither simple nor direct. Third, substantial variance exists in the correlations for some context variables; these relations are contingent on other influences. Industry differences and sample selection explain some inconsistencies in exploratory moderator analyses and should receive additional research attention.     

New development: Between politics and strategic planning—the management of government priorities in Lithuania

ABSTRACT

How do political agendas impact on strategic planning practices? This article shows that recent changes to the framework for managing government priorities have made Lithuania’s strategic planning system more politically responsive by mobilizing political attention, leadership and state funding to major government commitments. However, these changes have not yet translated into any longer term outcomes because policy implementation practices did not change very much.     

系统重要性地方政府综合识别研究——基于个体风险与信息传染风险视角

从"太大而不能倒"和"联系太紧而不能倒"两个维度,分别运用因子分析和转移熵网络分析测度地方政府的个体风险与信息传染风险,综合识别我国系统重要性地方政府。结果表明:两个维度综合确定的我国系统重要性地方政府名单更为符合系统重要性之要义;根据个体风险指数和传染风险指数的排名组合情况,可将31个地方政府归为四类;针对不同类型的系统重要性地方政府,监管部门应采取针对性的监管措施;传染风险对系统重要性的贡献更大,处于风险传染网络中心的地方政府需要实行更加严格的管控。     

A Decade in Review: New Zealand's Experience with Resource Accounting and Budgeting

Ten years before the United Kingdom introduced RAB a similar regime had been introduced in New Zealand. What evidence is there, then, that the experience with RAB has lived up to the promises made of it? While the speed with which RAB was introduced in New Zealand may make it appear easy, there were a number of theoretical and practical accounting and auditing issues involved in pioneering these developments. This paper explains how these difficulties were overcome, the benefits achieved, the outstanding issues to be resolved, and some new directions currently being proposed.     

Funding and School Accountability: The Importance of Private and Decentralised Public Funding for Pupil Attainment

We discuss the issue of how schools should be financed, concentrating on the role of private funding and public funding via subnational governments as accountability mechanisms in the provision of educational services. The historical evolution of school regulation in Italy and Spain has created differences in the percentage of pupils who attend private schools, the percentage of private school funding coming from public and private sources and the percentage of public school funding that comes from central or local government sources. We take advantage of these institutional diversities rooted in history to estimate the disciplining role of these different sources of funding in the context of an educational production function using Programme for International Student Assessment (PISA) data. Our results provide support to both accountability mechanisms and point to the presence of an important interplay between them.     

Innovation in entrepreneurial organisations: A platform for contemporary management change and a value creator

PurposeThis article examines the significance of innovation to organisations following strategies of entrepreneurial orientation. In particular, the study looks at the significance innovation adds to the implementation of contemporary management control systems (MCSs) and to improved performance in these organisations.Design/methodology/approachA quantitative analysis was conducted based on a random sample of Australian manufacturing companies. A structural equation modelling approach was adopted to test the study hypotheses.FindingsResults suggest that innovation mediates the relationships between entrepreneurial strategy and each of participative budgeting, the balanced score card (BSC), total quality management (TQM), just in time (JIT), and organisational performance. The study does not indicate a significant relationship between entrepreneurial strategy and activity based costing (ABC), even when innovation is in place.Originality/valueThe study empirically tests the vital role of innovation in the organisational adaptive cycle to entrepreneurial strategies, described earlier by Miles and Snow (1978). Further, the study validates a multi-dimensional strategy model first suggested by Langfield-Smith (1997).     

The Implementation and Use of Benchmarking in Local Government: A Case Study of the Translation of a Management Accounting Innovation

Benchmarking is a management accounting innovation (MAI) that can be used for performance measurement and management in both the private and the public sectors. Although public sector accounting researchers have reported some success with the use of benchmarking, frequently charged problems exist in implementing and using this management technique. To look beyond the technical and institutional explanations, this paper takes a translation approach and presents a case study of a local government benchmarking network. We conclude that there is a link between benchmarking implementation problems and initiators’ failure to build a strong network of benchmarking allies. Implementation is facilitated if actors, other than the initiators, recognize the possibility of making benchmarking more relevant and less cost focused. However, even when a network of actors has a favourable attitude towards benchmarking, benchmarking may still appear as an unruly ‘actant’. Furthermore, the perception of implementation failure and success is heterogeneous and connected to various actors’ adoption of benchmarking. We also conclude that there is a connection between the use of benchmarking and 1) actors’ possibilities to use benchmarking in the struggle for resources and 2) the perception of benchmarking information as ‘factual’ or ‘factual enough’. However, the perception of benchmarking information as ‘factual’ or ‘factual enough’ seems not only a matter of correct or incorrect ratios but also of whether such information serves actors’ interests. A final conclusion is that the use of benchmarking increases when actors other than the initiators complement the original idea and ‘counter interest’ the initiators.     

Real Exchange Rates and Fundamentals: A Cross‐Country Perspective

This paper employs newly constructed measures for productivity differentials, external imbalances, and commodity terms of trade to estimate a panel cointegrating relationship between real exchange rates and a set of fundamentals for a sample of 48 industrial countries and emerging markets. It finds evidence of a strong positive relation between the consumer price index‐based real exchange rate and commodity terms of trade. The estimated impact of productivity growth differentials between traded and nontraded goods, while statistically significant, is small. Increases in net foreign assets, government consumption, and trade restrictions tend to be associated with appreciating real exchange rates.     

Public and private spending for environmental protection: a cross‐country policy analysis

OECD data are used to investigate public and private environmental expenditures and, although they are more complete and consistent than other datasets, they are still poor. This is important in the context of measuring the benefits of environmental protection, when little is really known about its actual costs. Despite these limitations, this study demonstrates that there has been no shift towards an increasing private sector burden relative to the public sector over time. The paper also finds little evidence to show that environmental expenditures negatively impact on economic growth, although there is inconsistency between the ‘no effects’ finding of the competitiveness literature and the ‘negative effects’ finding of most of the productivity literature. Finally, the elasticity of expenditure with respect to income is found to be 1.2, lower than would be expected if the ‘environmental demand effect’ is significant in explaining the downward slope of the environmental Kuznets curve.