Public efficiency in Tokyo’s metropolitan local governments: the role of asset utilization and budgeting

IMPACT

The authors' findings suggest two important public policy interventions for policy-makers and local authorities. First, there appears to be a need for an increased focus on strategic municipal asset utilization to combat declines in efficiency. Second, municipalities using accrual accounting but still maintaining cash budgeting should seriously consider implementing accruals budgeting in order to improve their efficiency.

ABSTRACT

This paper examines the efficiency of Tokyo municipalities and also the determinants of relative technical efficiency. Data envelopment analysis (DEA) was employed to measure relative technical efficiency and second stage regression was employed to measure the association of various accounting factors. The results of this unique study suggest that public efficiency has declined since the introduction of accrual accounting in 2008, due both to under-utilized asset management, as well as a mismatch between traditional cash budgeting and accruals accounting respectively.

KEYWORDS:

• Accrual accounting
• asset utilization
• cash budgeting
• data envelopment analysis (DEA)
• public efficiency
• Tokyo Metropolitan Government (TMG)

Disclosure statement

No potential conflict of interest was reported by the author(s).