The inefficacy of accrual accounting in public sector performance management: Evidence from an emerging market

Heru Fahlev*, Irsyadillah Irsyadillah, Imam Arafat, Muhammad Adnan

*Corresponding author for this work

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This study aims to investigate the impact of accrual accounting adoption on Indonesian local governments. In particular, this study examines the differences of financial performance before and after the accrual adoption and the usefulness of accrual accounting information for public managers. Using mixed-method, data was collected from secondary sources and interviews. T Test for paired samples and Wilcoxon Signed Rank were employed to examine the statistical difference of Indonesian local government financial ratios before and after the adoption. Interviews were undertaken with local government managers and their consultants. To provide comprehensive understanding and discussion, this study adopts a theoretical pluralism using old institutional economics (OIE) and new institutional sociology (NIS) conjointly. The quantitative part demonstrated mixed results and lack of benefit of accrual accounting adoption in the Indonesian local governments. In the same vein, the qualitative part unveiled the failure of institutionalisation of new public management (NPM) values and principles that explained a marginal role of accrual accounting information in public managers decision-making process. The paper contributes to the continuing debate of the benefits of accrual accounting adoption for local governments.
Original languageEnglish
Article number2122162
Number of pages19
JournalCogent Business & Management
Issue number1
Publication statusPublished - 13 Sept 2022


  • Accrual accounting
  • financial performance
  • institutional theory
  • local government
  • NPM
  • Indonesia


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