Role of Media Coverage in Keeping Lid on Government Expenses

5月 22, 2017

Zhang Qi , Bu Danlu and Yu Zhi

Research Institute of Government Accounting, Zhongnan University of Economics and Law, Wuhan, China

School of Accounting, Southwestern University of Finance and Economics, Chengdu, China

Business School, University of International Business and Economic, Beijing, China

Abstract: Information monopoly of bureaucrats helps them maximize discretionary

budget. Public disclosure of budget can alleviate information asymmetry between

government and the public and empower public supervision on government budget. With

information intermediary function and reputational governance function, the media exert

a budget intervention effect in the public disclosure of government budget, which further

increases the effect of government budget disclosure. This paper investigates how media

reports influence “three public expenses” (TPE) budget planning of central government

departments by examining media reports on the disclosure of budget and final accounts

and using TPE budget as a proxy variable for discretionary budget of bureaucrats. We have

reached the following ﬁndings: (1) The higher the TPE budget implementation rate, the

greater budget growth will be. But this correlation can be restrained by media attention;

(2) Different stance of the media may exert different governance effects on TPE budget.

Good news about TPE may motivate bureaucrats to restrain the positive impact of TPE

budget implementation on budget growth. However, bad news about TPE will exert its

budget intervention effect only when administrative governance mechanism intervenes.

This study has broadened research on the media’s governance effect from the perspective

of government budget transparency and verified that under China’s unique institutional

background, the media may still play a positive role in public sector governance.

Keywords: media attention, stance of media report, public opinion environment, “three

public expenses” budget

JEL Classiﬁcation Codes: H83, P16, D73