Effects of the GASB No. 34 infrastructure reporting standards on state highway infrastructure quality: A panel data analysis
Journal of Public Budgeting, Accounting & Financial Management
ISSN: 1096-3367
Article publication date: 4 June 2018
Abstract
Purpose
The purpose of this paper is to evaluate whether the additional infrastructure information in US state financial statements improves infrastructure quality.
Design/methodology/approach
Based on institutional theory, the authors developed six models and estimated them on a state panel data set.
Findings
The authors found that the implementation of the Government Accounting Standard Board (GASB) Statement No. 34 improved state highway infrastructure quality, and the states using the modified approach had a larger effect compared to the states using depreciation accounting. The authors further used a two-step path analysis and found that the implementation of GASB 34 indirectly improved highway quality through increasing state highway maintenance expenditures. From the empirical results, the authors conclude that the exercise of collecting and developing systems to track the additional data has provided the opportunity for officials to use the information to prioritize limited funding and improve their asset management practices.
Practical implications
Future research may extend this research by exploring the detailed micro-mechanisms of how decision makers use infrastructure information in their asset management practices, as well as by increasing the number of years in the panel data set to fully capture changes in behavior.
Social implications
In addition, governments currently using depreciation should be encouraged to move to the modified approach.
Originality/value
This is the first attempt to empirically examine the effects of GASB 34 on infrastructure condition.
Keywords
Acknowledgements
This paper forms part of a special section “Public Infrastructure Finance Symposium”.
Citation
Kim, J., Chen, C. and Ebdon, C. (2018), "Effects of the GASB No. 34 infrastructure reporting standards on state highway infrastructure quality: A panel data analysis", Journal of Public Budgeting, Accounting & Financial Management, Vol. 30 No. 2, pp. 191-210. https://doi.org/10.1108/JPBAFM-06-2018-027
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited