Do public account financial statements matter? Evidence from Japanese municipalities

Shun-ichiro Bessho and Haruaki Hirota

European Journal of Political Economy, 2023, vol. 78, issue C

Abstract: Many governments are introducing business-like accounting systems. This paper examines the fiscal effects of compiling business-like financial statements on the expenditures of local governments in Japan as a complement to cash-based reporting. Using the variation in the deadlines for compiling new statements given by the central government in a difference-in-differences instrumental variable approach, we found that business-like financial statements have limited effects on municipalities’ expenditures but have short-run effects on social assistance expenses. This might be a part of the reconstruction of their expenditure structure.

Keywords: Accounting standard; Financial statement; Expenditure; Difference-in-differences with instrumental variables (search for similar items in EconPapers)
JEL-codes: H72 H77 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:78:y:2023:i:c:s0176268023000022

DOI: 10.1016/j.ejpoleco.2023.102358

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