earticle

영어

Since the accrual basis accounting was adopted in 2007 at the Korean local governments, no study has examined the effects various types of government costs on the level of liability. Given accrual basis accounting produces government costs along with government function and characteristics, it is very meaningful to analyze the effects of government transfer to the private sector on government liability. This study empirically tests whether the level of government transfer to the private sector leads to an increase in the level of liability at the 16 metropolitan governments in Korea during 1998~ 2015 by employing panel dataset. The findings suggests that an increase in the level of government transfer to the private sector leads to an increase in the level and ratio of liability. Moreover, an increase in the level of personnel costs and other costs also results in an increase in the level and ratio of transfer. The findings of this study suggest that local governments should carefully monitor the level of government transfer to the private sector in order to maintain the level of liability as well as fiscal soundness. Futhermore, given that different types of government costs differently affects the level of liability, a care must be also taken in order to maintain overall local fiscal soundness. By employing accrual-basis accounting data, this study also enhanced the usefulness of accrual basis accounting at the local government level.