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Does accrual-based government financial information serve as an indicator of fiscal risks?

Title
Does accrual-based government financial information serve as an indicator of fiscal risks?
Author
김종현
Keywords
Accrual-based accounting; fiscal balance; government liabilities; public financial management; sovereign bond yields; sovereign credit ratings
Issue Date
2020-06
Publisher
ROUTLEDGE JOURNALS
Citation
PUBLIC MONEY & MANAGEMENT, page. 1-10
Abstract
This paper shows accrual-based government financial information is an effective indicator of fiscal risk. The authors analysed the association of accrual-based government financial information (government liabilities and fiscal balance) with fiscal risks (proxied by sovereign credit ratings and sovereign bond yields). Analysing 24 OECD member states from 1997 to 2015, the authors found that the greater a government’s liabilities, the lower its sovereign credit rating and the higher its sovereign bond yields. In addition, the sounder a country’s fiscal balance, the higher its sovereign credit rating and the lower its sovereign bond yields. IMPACT This paper provides empirical evidence for managers and policy-makers that a country’s fiscal risks can be accurately measured through accrual-based government financial information. Evidence is provided that the international capital market recognizes the positive effects of the OECD’s accrual-based government accounting scheme on public financial management. The authors’ results suggest that accrual-based government financial information, especially government liabilities and fiscal balance, should be used for public financial management.
URI
https://www.tandfonline.com/doi/full/10.1080/09540962.2020.1769384https://repository.hanyang.ac.kr/handle/20.500.11754/163443
ISSN
1467-9302; 0954-0962
DOI
10.1080/09540962.2020.1769384
Appears in Collections:
COLLEGE OF BUSINESS AND ECONOMICS[E](경상대학) > ACCOUNTING AND TAX(회계세무학과) > Articles
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