Public Budget Ratcheting: Do Malaysia Federal Government Agencies Adjust Their Budgets Based on Expenditure Variances?

Daw, Tin Hla and Chang, Sze Ping and Abu Hassan, Md. Isa and Micheal, Tinggi and Shaharudin, Japar (2016) Public Budget Ratcheting: Do Malaysia Federal Government Agencies Adjust Their Budgets Based on Expenditure Variances? UNIMAS Review of Accounting and Finance, 1 (1). pp. 11-35. ISSN ISBN 978-1-85449-733-8

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Abstract

Public budget is an important role in achieving a country’s economic and social development goals. It essentially requires that an entire government budget be managed effectively and efficiently to ensure attainment of those goals as well as well-being of the citizens. Therefore, it is necessary to examine government spending behaviour and the process of budget preparation. This study looks into the relationship between changes in current budget and expenditure variances, in particular, operating expenditure of the Malaysia federal government. The influence of expenditure variances (overspending/ under spending) on current budget changes is examined to determine if prior year expenditure variances cause non-symmetry changes in current budget so as to identify the presence of budget ratcheting. Dynamic Panel Regression Analysis is used to examine the data from forty four government agencies/programs, covering the period from 2010 until 2014. The findings reveal that there is a significant positive association between changes in current budget with prior year overspending by agency/program. However, the relationship between changes in current budget with prior year underspending by agency/program is not significant. The contribution of the research highlights that the presence of budget ratcheting among the federal government agencies/programs of public organisations needs to be indicated to enhance budget administration regarding ratcheting.

Item Type: Article
Uncontrolled Keywords: Budget Ratcheting, Expenditure Variances, Auto Correlation and Panel Regression JEL Classification Code: M41 M48 and C33, research, Universiti Malaysia Sarawak, unimas, university, universiti, Borneo, Malaysia, Sarawak, Kuching, Samarahan, ipta, education
Subjects: H Social Sciences > HG Finance
Divisions: Academic Faculties, Institutes and Centres > Faculty of Economics and Business
Faculties, Institutes, Centres > Faculty of Economics and Business
Depositing User: Karen Kornalius
Date Deposited: 05 Oct 2016 06:33
Last Modified: 12 Oct 2017 03:06
URI: http://ir.unimas.my/id/eprint/13691

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