Dargenidou, Christina , DE VICENTE LAMA, MARTA, Osma, Beatriz Garcia
No
J. Account. Public Policy
Article
Científica
01/11/2024
001356710100001
We argue and find evidence that the spending of consolidated municipal enterprises is influenced by elected officials' incentives to meet fiscal policy targets. Our evidence indicates that municipalities have control over the operating decisions of consolidated municipal enterprises, despite their autonomous legal status. Importantly, we find that the implications of elected officials' attempts to avoid a fiscal deficit for consolidated subsidiaries' spending do not extend to the counterfactual case of non-consolidated entities also owned by the municipality. Therefore, while consolidation promotes fiscal monitoring, it also plausibly enables politicians' agenda to permeate areas designated to be kept at arm's length.
Consolidation; Government accounts; Real effects of consolidation regime; Real earnings management; Municipal enterprises