Premium
ACCOUNTING REFORMS: DETERMINANTS OF LOCAL GOVERNMENTS' CHOICES
Author(s) -
AnessiPessina Eugenio,
Nasi Greta,
Steccolini Ileana
Publication year - 2008
Publication title -
financial accountability and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.661
H-Index - 44
eISSN - 1468-0408
pISSN - 0267-4424
DOI - 10.1111/j.1468-0408.2008.00455.x
Subject(s) - accrual , accounting , local government , bookkeeping , business , accounting information system , government (linguistics) , capital market , accounting standard , economics , financial accounting , finance , political science , earnings , linguistics , philosophy , public administration
The introduction of accrual accounting in Italian Local Governments has been mandated in a way that permits, and in fact encourages, a merely formal compliance. Local Governments must produce accrual‐based financial statements, but double‐entry bookkeeping is not mandatory, nor may traditional budgetary accounting be abandoned. Why, then, should they bother to introduce an integrated system of budgetary and accrual accounting? In this paper, we empirically investigate the determinants of Local Government's choices of accounting innovation. According to our results, ‘rational’ elements such as complexity, types of activities performed, presence of surpluses, and access to capital markets are seemingly unhelpful in explaining why a Local Government decides to introduce accrual accounting. What counts are ‘institutional’ and cultural explanations, such as the perceptions of CFOs and the North‐South divide.