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- © University of Latvia, 2002-2023
Article
FINANCIAL ACCOUNTING SUPERVISION, FISCAL DECENTRALIZATION, AND NATIONAL GOVERNANCE
Yaxiong Li, Zhongxin Wu, Zili Zhu, Mengjie Qian, Ziying Yu
ABSTRACT: Financial accounting supervision plays a huge role in the modernized construction of national governance. To discover the relationship between financial accounting supervision and national governance, using the panel data of 31 provincial regions in China from 2010 to 2020, the effects of financial accounting supervision and fiscal decentralization on national governance were explored by multiple regression analysis and principal component analysis. Moreover, the moderating effect of fiscal decentralization on the relationship between financial accounting supervision and national governance was investigated from perspectives of fiscal revenue decentralization, fiscal expenditure decentralization, and fiscal freedom. Results demonstrate that financial accounting supervision can influence national governance ability. Particularly, the effect of government fiscal supervision is significant. As a moderator variable, fiscal decentralization has a significant effect. Fiscal revenue decentralization and fiscal expenditure decentralization inhibit the relationship between financial accounting supervision and national governance, and fiscal freedom promotes this relationship. Different degrees of national governance can be found among regions in China. Given the existing financial accounting supervision, its effect in Eastern China and Western China is the most significant. The strength of auditing supervision is improved by decreasing the differences between budgets and final accounts, thereby influencing financial accounting supervision and improving the national governance level. Conclusions provide theoretical guidance for the improvement of the national governance system and governance capacity.
KEYWORDS: financial accounting supervision, fiscal decentralization, fiscal freedom, national governance, fiscal supervision.
JEL classification: M41, M48, O38.