The impact of Financial Information on Voting Behaviour

Abstract

In the public sector, citizens have been recognized as potential users of financial reporting elaborated by governments. A specific use of financial reporting by citizens is voting decisions, where they can approve or disapprove of the politicians' management. Political budget cycles literature contains many studies that evidence that politicians manage the budget in order to increase their possibilities of being reelected, but there is no consensus about the outcome. This chapter aims to study to what extent financial management influences electoral outcomes and if there is any evidence that the financial management of governments has an impact on election results. The study is focused on Spanish local governments and uses data from the elections of 2011 and 2015. The results indicate that governments with higher capital investments or fewer deficits have no advantages in the elections. However, citizens reward government policies with higher levels of social expenditures and punish higher fiscal pressure.

Does Government Accounting Information Matter to Gain Votes? Evidence from Local Elections in Indonesia

“…This finding contradicts Veiga & Veiga (2007), who state that increased capital expenditures positively affect the likelihood of re-election, in the pre-election period. However, Brusca et al (2019) prove that governments with higher capital investment do not have an advantage in elections. In other words, infrastructure development policies are not always popular with voters.…”

“…They find the accounting ratios representing the service level and the municipal debt-related could differentiate the election result. The subsequent empirical findings (Bradbury & Scott, 2015;Brusca et al, 2019;A. Cunha et al, 2016;D.…”

“…The electoral selection allows voters to maintain an incumbent whose characteristics align with their interests-the incumbent's factors include financial accountability that surrogate represent in government accounting information (Ingram & Copeland, 1981). The model was developed based on previous studies (Brusca et al, 2019;Feroz & Wilson, 1994). The research model constructed the effect of accounting information on the number of votes for the incumbents seeking reelection.…”

“…In the era of public sector reform, government accounting plays a strategic role in providing information to measure and evaluate financial performance and government service performance (Mir & Sutiyono, 2013;Brusca et al, 2019). In addition, it communicates the results of government policies to stakeholders (Cuadrado-Ballesteros et al, 2019).…”

Determining factors in modified audit reports: evidence from Portuguese municipalities

“…Cohen et al (2019) state that the main reason for earnings management is the electoral cycle, as earnings management appears to be greater when the mayor is re-elected compared to during their first election, and that the pre-election period is conducive to earnings management. The impact that financial information has on the electorate was studied by Brusca et al (2020). These authors concluded that local governments that made higher capital investments or that presented reduced deficits do not have any electoral advantage; however, voters reward local governments with more social spending and punish local governments with higher taxes.…”