Political-Ideological Circumstances and Local Authorities’ Debt: Evidence from Portuguese Municipalities

Ribeiro, Nuno; Jorge, Susana

doi:10.5709/ce.1897-9254.164

Cited by 11 publications

(24 citation statements)

References 22 publications

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“…In the local government context, similar to the finding of Baber and Sen (1986) and Ribeiro and Jorge (2015) reported that the political-electoral cycle is associated with the level of debt, with debt increasing in election years. The increase in debt levels was considered by the authors to be consistent with the expectations of public choice theory, as governors maximised their chances of being re-elected by spending more without increasing taxes.…”

Section: Literature Review and Theoretical Lenssupporting

confidence: 64%

Political competition and debt: evidence from New Zealand local governments

Chatterjee

Bhattacharya

Taylor

et al. 2019

ARJ

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Purpose This paper aims to investigate whether the amount of local governments’ debt can be predicted by the level of political competition. Design/methodology/approach The study uses the artificial neural network (ANN) to test whether ANN can “learn” from the observed data and make reliable out-of-sample predictions of the target variable value (i.e. a local government’s debt level) for given values of the predictor variables. An ANN is a non-parametric prediction tool, that is, not susceptible to the common limitations of regression-based parametric forecasting models, e.g. multi-collinearity and latent non-linear relations. Findings The study finds that “political competition” is a useful predictor of a local government’s debt level. Moreover, a positive relationship between political competition and debt level is indicated, i.e. increases in political competition typically leads to increases in a local government’s level of debt. Originality/value The study contributes to public sector reporting literature by investigating whether public debt levels can be predicted on the basis of political competition while discounting factors such as “political ideology” and “fragmentation”. The findings of the study are consistent with the expectations posited by public choice theory and have implications for public sector auditing, policy and reporting standards, particularly in terms of minimising potential political opportunism.

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Section: Literature Review and Theoretical Lenssupporting

confidence: 64%

Political competition and debt: evidence from New Zealand local governments

Chatterjee

Bhattacharya

Taylor

et al. 2019

ARJ

View full text Add to dashboard Cite

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“…In addition, the results show that the ideological orientation of ruling parties does not play a key role in municipal efficiency levels. This is actually a common finding in empirical studies analyzing the performance of Portuguese municipalities focused on different aspects, such as the establishment of local tax rates (Silva et al (2011), the amount of spending (Costa et al, 2015) or debt management (Ribeiro and Jorge, 2015). Lastly, the variable representing time does not have a significant impact either.…”

Section: Resultsmentioning

confidence: 85%

“…The growing debt size has also been an important feature observed in municipal financing, especially after the global economic and financial crisis started in 2008. The debt of Portuguese local authorities increased notably during the 2008-2010 period up to a total volume of over 8 billion euros, although this amount decreased in the following years thanks to the subsidies and special loans received from the central government(Ribeiro and Jorge, 2015).The number of municipalities has remained fairly stable over the last four decades (only three new municipalities were created). There are currently 308 municipalities, 278 of which are located in mainland Portugal and the remaining 30 are on the islands.…”

mentioning

confidence: 99%

Efficiency assessment of Portuguese municipalities using a conditional nonparametric approach

et al. 2017

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Measuring local government efficiency is a complex task that has to take into account that they usually operate in a heterogeneous context. Therefore, the estimation of relative efficiency measures of their performance needs to account for the effect of contextual and exogenous variables on the production process. This should assure that the respective measures adequately reflect the portion of inefficiency that may be attributable to local authorities. In this paper, we apply time-dependent conditional frontier estimators to assess the performance of the 278 Portuguese mainland municipalities for the 2009-2014 period. By applying this nonparametric approach, we can avoid the strong assumptions on the specification of the estimated production function required by traditional two-stage methods. Furthermore, we examine the effect of contextual and exogenous variables on municipal efficiency levels and technological change. The results reveal that the recent local reforms introduced after the bailout agreement have slightly enhanced the performance of local authorities, but only for small and medium-sized municipalities.

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“…Some studies are about politicians and their use of financial information, but discuss topics of different nature, such as budget cycles (Bastida et al , 2013; Ribeiro and Jorge, 2015) or budget preparation on an accrual basis (Sterck, 2007).…”

Section: The Use Of Accounting Information By Politiciansmentioning

confidence: 99%

The use of budgetary and financial information by politicians in parliament: a case study

Jorge

Jesus

Nogueira

2019

JPBAFM

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Purpose The purpose of this paper is to research the use of accounting information by politicians. Based on the Portuguese Parliament setting, it seeks to understand how useful politicians consider this information to be, what type of budgetary and financial information they use, and for what purposes. Finally, the research also seeks to find out whether politicians resort to expert intermediaries or advisors help them in the use of this information. Design/methodology/approach Following a qualitative and interpretative methodology, the study draws upon interviews with Members of Parliament in Portugal (and their technical advisors (TAs)) from all political parties, in particular the members of the Budget, Finance and Administrative Modernization Committee (COFMA) of the Parliament. Findings Research shows that, due to the general lack of knowledge and the complexity of the accounting information, politicians in the Parliament do not use it frequently, only occasionally. To be better or worse informed for the debates and other activities depends on each Member of Parliament’s personal willingness to prepare oneself, notwithstanding some aggregated and previously analyzed information made available by official technical support units. Parliamentarians may also resort to TAs, who prepare the information at their request. Both intermediaries and TAs are deemed important to support parliamentarians’ understanding of more technical budgetary and financial issues. Practical implications This paper shows that politicians acknowledge there is room for improving the role of information intermediaries and advisors, who would support them to better understand and use accounting information. Parliamentary groups incharge of hiring advisors, as well as accounting professionals, in Portugal and in other countries, must be aware of the very useful role accountants play in this process. Social implications While allowing to understand whether and how politicians use accounting information, this research contributes to the process of public sector accounting reforms in Portugal, and at an international level, inasmuch as public sector accounting and reporting standards should better address these users’ information needs. Assuming that these reforms would foster more accurate, transparent and useful information for accountability and decision making, it is essential that politicians acknowledge and become real users of accounting information, in order to accomplish those objectives. Originality/value This study contributes to the general knowledge of how politicians use accounting information. Academic studies so far have not gathered enough evidence about the type of accounting information that is actually important for politicians. This paper highlights that use of such information by politicians depends on individual skills and their willingness to receive the appropriate advice.

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Political-Ideological Circumstances and Local Authorities’ Debt: Evidence from Portuguese Municipalities

Cited by 11 publications

References 22 publications

Political competition and debt: evidence from New Zealand local governments

Political competition and debt: evidence from New Zealand local governments

Efficiency assessment of Portuguese municipalities using a conditional nonparametric approach

The use of budgetary and financial information by politicians in parliament: a case study

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