Objective and subjective measures of government financial condition: do municipal public managers know their financial condition?
Abstract
The objective of this work is to analyze the relationship between the subjective and objective measures of the government's financial condition in the municipalities of the State of Paraíba. A government's financial condition is understood as the ability of management to meet its financial obligations in a timely, present and future manner, in addition to providing public goods and services demanded by society at desired levels and qualities. However, the manager's ability to properly understand his current financial condition is questioned. In view of this scenario, the model by Wang et al. (2007) and Arnett (2014) to obtain the objective measure of financial condition and a questionnaire directed to municipal public managers, as a subjective measure self-declared by managers regarding their current condition. In this premise, data from 200 municipalities in the State of Paraíba, corresponding to the period of 2017, were analyzed through graphical and econometric analysis. The main results indicate that the manager is able to have an adequate perception of his short-term financial condition (liquidity and indebtedness), but that in the face of long-term aspects (solvency and investments), he is unable to have an adequate reading, just as he cannot properly assess your condition in general. It is concluded, therefore, that local managers need to improve their perceptions about the long-term financial condition (solvency and investments) and that accounting reports need to address them better, helping to assess it correctly in a generic way, causing the manager leads his management to fiscal responsibility.
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