Public sector financial disclosure on the Internet : a study of New Zealand local authorities

Abstract

Some New Zealand local authorities elect to provide financial information on their websites. Literature examining the behaviour of managers in the public sector suggests that agency relationships in the sector motivate such managers to provide information to enable the monitoring of their actions. This literature identifies a number of characteristics and variables that proxy for agency costs in the public sector. The recent development of the Internet provides an opportunity for examining voluntary disclosure in the public sector and, in particular, in the local government environment. This paper examines the voluntary Internet financial reporting practices of local authorities. Five variables associated with voluntary disclosure - size, type of local authority, profitability (surplus), leverage and press visibility - are examined. The results of the univariate analysis indicate that size, council type, and press visibility are associated with local authorities' choice to report financial information on the Internet. However, the results of multivariate analysis indicate that only size and type of council are associated with the quantity and type of financial disclosure on the Internet. Possible limitations of the study and suggestions for future research are discussed in the paper.