Financial Reporting Quality and Online Disclosure Practices in Spanish Governmental Agencies

Abstract

Good governance in the public sector implies high accountability levels. Accountability is a multidimensional concept that includes the quantity and reliability of disclosures as well as rendering accounts to the citizenry. Nowadays, good governance, accountability, and financial performance are key for the long-term sustainability of autonomous public sector organizations. The objective of this paper is to study how key governance features relate to the quantity and quality of the information disclosed. In particular, how the governing body, financial performance and organizational features relate to online transparency and financial reporting quality, as well as how these two accountability dimensions are related. To fulfill this objective, we have used the Structural Equation Modeling, Partial Least Squares (PLS-SEM) approach. The focus of our analyses is on Spanish central government agencies. The size of, and a greater presence of independent members in, the governing body are explanatory factors behind the quality of the financial reports. Our findings also show that the quality of the financial information is also affected by the pressure that Eurostat requirements -deficit limits- puts on public sector entities, which leads to the use of smoothing practices. Online disclosure practices are not explained by the features of the governing body, but by the size of the agencies and their financial results. The better the financial reporting quality, the higher the online disclosure levels.

Determinants of the Quality of Financial Reports

“…Tran et al (2021) found that accounting capacity has a positive effect on financial reporting quality in the public sector in Vietnam. Garcia-Lacalle and Torres (2021) found that the size of, and a greater presence of independent members in the governing body are explanatory factors behind the quality of the financial reports in Spanish central government agencies. Meanwhile, many studies have been carried out on the quality of local government financial reports in Indonesia, but the results are still inconsistent and contradictory.…”

دور الافصاح الاختياري عبر الانترنت في تعزيز جودة التقارير المالية دراسة تطبيقية على عينة من الشركات العراقية

“…To achieve this aim, the research dealt with a content analysis method for the annual financial statements of a sample of the Iraqi banking companies listed in the Iraq Stock Exchange. Which are (10) companies for the period from 2010 to 2020, for the purpose of collecting primary data and measuring the study variables. Correlation and regression models were used to examine the relationship and influence between those variables.…”