IDEAS home Printed from https://ideas.repec.org/a/bla/ausact/v32y2022i2p201-213.html
   My bibliography  Save this article

Impact of Depreciation Information on Capital Budgeting among Local Governments: A Survey Experiment

Author

Listed:
  • Makoto Kuroki

Abstract

This study investigates the impact of depreciation practices on the internal decision making of local government (LG) budget officers. Prior studies focus on depreciation practices that influence decision making and policy formulation through financial performance indicators. However, such practices are also expected to affect capital asset management. Specifically, the presence of depreciation information makes it possible for budget officers to account for the burden of current and future generations such as depreciation costs and debt interests when budgeting. Thus, this study tests the impact of depreciation information on capital budgeting by conducting a survey experiment with all 1788 LGs in Japan. A questionnaire was sent to LG budget officers with two patterns of experimental groups: decision making for capital budgeting (a) without depreciation information and (b) with depreciation information. The experimental results show that budget officers’ capital budget decisions are influenced by the presence of depreciation information. This study contributes to accounting and public sector research and practice by showing the impact of depreciation information on the decision making of LG budget officers for capital budgeting.

Suggested Citation

  • Makoto Kuroki, 2022. "Impact of Depreciation Information on Capital Budgeting among Local Governments: A Survey Experiment," Australian Accounting Review, CPA Australia, vol. 32(2), pages 201-213, June.
    • Handle: RePEc:bla:ausact:v:32:y:2022:i:2:p:201-213
    DOI: 10.1111/auar.12355
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/auar.12355
    Download Restriction: no
    File URL: https://libkey.io/10.1111/auar.12355?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mari Kobayashi & Kiyoshi Yamamoto & Keiko Ishikawa, 2016. "The Usefulness of Accrual Information in Non‐mandatory Environments: The Case of Japanese Local Government," Australian Accounting Review, CPA Australia, vol. 26(2), pages 153-161, June.
    2. Stephen Howe, 2004. "Condition-Based Depreciation — The Engineering Perspective," Australian Accounting Review, CPA Australia, vol. 14(34), pages 48-55, November.
    3. Igor Ivannikov & Brian Dollery, 2020. "Accounting Problems in Infrastructure Asset Valuation and Depreciation in New South Wales Local Government," Australian Accounting Review, CPA Australia, vol. 30(2), pages 105-115, June.
    4. Vicente Pina & Lourdes Torres & Ana Yetano, 2009. "Accrual Accounting in EU Local Governments: One Method, Several Approaches," European Accounting Review, Taylor & Francis Journals, vol. 18(4), pages 765-807.
    5. Joseph Drew & Brian Dollery, 2015. "Inconsistent Depreciation Practice and Public Policymaking: Local Government Reform in New South Wales," Australian Accounting Review, CPA Australia, vol. 25(1), pages 28-37, March.
    6. Janet Mack & Christine Ryan, 2006. "Reflections on the theoretical underpinnings of the general-purpose financial reports of Australian government departments," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 19(4), pages 592-612, July.
    7. Janet Lee & Gregory Fisher, 2004. "Infrastructure assets disclosure in Australian public sector annual reports," Accounting Forum, Taylor & Francis Journals, vol. 28(4), pages 349-367, December.
    8. Marc Robinson, 2009. "Accrual budgeting and fiscal policy," OECD Journal on Budgeting, OECD Publishing, vol. 9(1), pages 1-29.
    9. Mr. Marc Robinson, 2009. "Accrual Budgeting and Fiscal Policy," IMF Working Papers 2009/084, International Monetary Fund.
    10. Eugenio Anessi-Pessina & Carmela Barbera & Mariafrancesca Sicilia & Ileana Steccolini, 2016. "Public sector budgeting: a European review of accounting and public management journals," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 29(3), pages 491-519, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hans Pitlik & Michael Klien & Stefan Schiman, 2017. "Stabilitätskonforme Berücksichtigung nachhaltiger öffentlicher Investitionen," WIFO Studies, WIFO, number 60595.
    2. Bessho, Shun-ichiro & Hirota, Haruaki, 2023. "Do public account financial statements matter? Evidence from Japanese municipalities," European Journal of Political Economy, Elsevier, vol. 78(C).
    3. Zubir Azhar & Ervina Alfan & Krishnen Kishan & Nurul Husna Assanah, 2022. "Accrual Accounting at Different Levels of the Public Sector: A Systematic Literature Review," Australian Accounting Review, CPA Australia, vol. 32(1), pages 36-62, March.
    4. Riccardo Fiorito, 2014. "Extra Government Debt in the Great Recession: All Intentional?," Working Papers LuissLab 14110, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    5. Changwony, Frederick Kibon & Paterson, Audrey S., 2019. "Accounting practice, fiscal decentralization and corruption," The British Accounting Review, Elsevier, vol. 51(5).
    6. Oulasvirta, Lasse, 2014. "The reluctance of a developed country to choose International Public Sector Accounting Standards of the IFAC. A critical case study," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(3), pages 272-285.
    7. Togi Parulian Purba, 2017. "Determinant of Compliance Investors in Satisfying a Fiscal Obligation," International Journal of Economics and Financial Issues, Econjournals, vol. 7(6), pages 1-7.
    8. Maria‐Eleni K. Agoraki & Stella Kardara & Tryphon Kollintzas & Georgios P. Kouretas, 2023. "Debt‐to‐GDP changes and the great recession: European Periphery versus European Core," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 3299-3331, July.
    9. van Helden, Jan & Caperchione, Eugenio & Pattaro, Anna Francesca, 2023. "Use and non-use of accounting information: The case of controversial projects in public and non-profit settings," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 90(C).
    10. Raffer, Christian, 2020. "Accrual Accounting and the Local Government Budget - A Matching Evaluation," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224630, Verein für Socialpolitik / German Economic Association.
    11. Igor Ivannikov & Brian Dollery, 2020. "Accounting Problems in Infrastructure Asset Valuation and Depreciation in New South Wales Local Government," Australian Accounting Review, CPA Australia, vol. 30(2), pages 105-115, June.
    12. Tóth, Balázs, 2021. "Milyen kapcsolatban állnak a közszféra reformjai a gazdaságpolitikai paradigmákkal? [How reforms of the public sector relate to the paradigms of economic policy]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 205-222.
    13. Mussari Riccardo, 2014. "EPSAS and the Unification of Public Sector Accounting Across Europe," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 4(3), pages 299-312, December.
    14. Ferry, Laurence & Zakaria, Zamzulaila & Zakaria, Zarina & Slack, Richard, 2018. "Framing public governance in Malaysia: Rhetorical appeals through accrual accounting," Accounting forum, Elsevier, vol. 42(2), pages 170-183.
    15. Stewart Jones & Nurul Alam, 2019. "A machine learning analysis of citation impact among selected Pacific Basin journals," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2509-2552, December.
    16. Guido Modugno & Ferdinando Di Carlo & Manuela Lucchese & Tommaso Agasisti, 2021. "Grafting New Values into Public Institutions by Reforming the Accounting System: Lessons Learned from the Italian Higher Education System," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(7), pages 1-20, July.
    17. B. Buylen & J. Christiaens, 2013. "Politics by numbers? An exploration of councillors’ apparent use of financial information during the budget discussion in Flemish municipal councils," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/841, Ghent University, Faculty of Economics and Business Administration.
    18. Joseph Drew, 2018. "Playing for keeps: local government distortion of depreciation accruals in response to high-stakes public policy-making," Public Money & Management, Taylor & Francis Journals, vol. 38(1), pages 57-64, January.
    19. Javier Garcia-Lacalle & Lourdes Torres, 2021. "Financial Reporting Quality and Online Disclosure Practices in Spanish Governmental Agencies," Sustainability, MDPI, vol. 13(5), pages 1-21, February.
    20. Marco Tieghi & Rebecca L. Orelli & Emanuele Padovani, 2018. "Accounting Reform in Italian Universities. Internal Response to Accounting Change," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2018(1), pages 117-138.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ausact:v:32:y:2022:i:2:p:201-213. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1035-6908 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.