The association between accounting performance and constituent response in political markets
Abstract
Purpose
The purpose of this paper is to investigate whether constituents respond to local government accounting data. Since 2006, New Zealand local authorities (councils) have been required to disclose long-term accounting data relating to forecast operating revenue and expenses.
Design/methodology/approach
The authors test whether the difference between the actual operating expenditure as reported in the annual report and as forecasted is associated with electoral outcomes.
Findings
The authors find that accounting performance and the sign of accounting performance (i.e. expenditure over-runs) are associated with greater councilor re-election. Furthermore, accounting performance is also associated with greater voter turnout.
Originality/value
The production and disclosure of council planning data is based on the perceived accountability of the council to its constituents. The authors find that accounting, in an electoral context, has both information content and conveys good/bad news about accounting performance to voters.
Keywords
Acknowledgements
For comments on earlier drafts of this paper, we thank participants at the 2009 ARA, 2012 JCAE and 2012 AFAANZ conferences and workshops at the University of Otago, the University of Auckland and, in particular, William Baber, Robert Knechel, David Lont, Paul Rouse, Colin Scott, Irene Tutticci and Earl Wilson.
Citation
Bradbury, M. and Scott, T. (2015), "The association between accounting performance and constituent response in political markets", Pacific Accounting Review, Vol. 27 No. 4, pp. 394-410. https://doi.org/10.1108/PAR-02-2014-0007
Publisher
:Emerald Group Publishing Limited
Copyright © 2015, Emerald Group Publishing Limited