The Incentives for the Evolution of Performance-Oriented Accounting Information Systems in the Governmental Setting (Theory, Production, Principal-Agent Model, Economic, Special Interest Groups).

This dissertation develops an empirically-based theory of governmental accounting which explains the incentives for producing performance-oriented accounting information. Governmental accounting information is analyzed as an economic good which is produced in response to the dem and for monitoring activity to reduce the agency costs of enforcing contractual relationships between principals and agents. The principal-agent model of government in which special interest groups are viewed as the dominant principals, coupled with the supporting evidence from the case study of the Michigan Department of Public Health (MDPH), provides a rich description of the economic incentives related to the production of performance-oriented accounting information. Competition among special interest groups for scarce government resources is identified as a dominant factor affecting the incentives for the production of performance-oriented accounting systems. An interview survey methodology was employed to gather evidence on testable hypotheses related to the existing lack of a performance-oriented accounting information system at MDPH. Correlation analysis was used to analyze the quantitive interview data. The analysis supports the prediction that special interest groups in positions of relative political strength will oppose the development of performance-oriented accounting information systems in their area of special interest. The study results also provide a rich description of the conditions which resulted in the non-funding of the proposed accounting system. The findings have substantial implications for accounting policy-makers; if they fail to take into account the implications of this theory in setting accounting st and ards, the st and ards are not likely to gain acceptance. The major contribution of the dissertation is the theory developed, which explains the economic rationale of existing governmental accounting systems.PhDAccountingUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/160491/1/8512377.pd