Analysis of the implementation of information disclosure ordinances in Japan: the effect on the income of chief executiv
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Analysis of the implementation of information disclosure ordinances in Japan: the effect on the income of chief executives in local governments Eiji Yamamura1 · Ryo Ishida2 Accepted: 8 October 2020 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract In Japan, the disclosure ordinance has been drastically enacted during the—1999– 2010. Using an originally constructed panel dataset consisting of approximately 1700 local governments for 1999–2010, we empirically examined the influence of information disclosure ordinances on the income of chief executives in local Jap‑ anese governments. Furthermore, we also investigated how the effect of the ordi‑ nance changes with time. Our key finding was that the income of such local gov‑ ernment officials decreased after implementing the ordinances; that income also declined with time. Hence, information disclosure about local government reduced the income of top officials, which increased with time. The income of chiefs execu‑ tives was open, without the need for ordinances; however, the ordinances provided transparency regarding the work performance of chief executives. From this find‑ ing, we derive the argument that transparency reduces the chief executive’s income because of an increase in accountability. Keywords Information disclosure ordinance · Local governments · Panel data · Transparency JEL Classification D72 · H79
* Eiji Yamamura yamaei@seinan‑gu.ac.jp 1
Department of Economics, Seinan Gakuin University, 6‑2‑92 Sawaraku Nishijin, Fukuoka 814‑8511, Japan
2
Policy Research Institute, Ministry of Finance, Tokyo, Japan
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E. Yamamura, R. Ishida
1 Introduction It has recently been reported that people’s preferences for inequality and redistribu‑ tion are based on available information that enables them to compare their economic situation with others (for example, Card et al. 2012; Cruces et al. 2013; Kuzimeko et al. 2015; Karadja et al. 2017). That is, transparency regarding the income level of public officials can change people’s preferences for redistribution and income level. Such transparency may even influence policymaking because people have a tendency for inequality aversion (Fehr and Schmidt 1999). Furthermore, transpar‑ ency policies surrounding salaries have drawn growing public attention and have been examined in various countries such as the United States (Mas 2017), Canada (for example, Gomez and Wald 2010; Dobrescu et al. 2014), Norway (Bø et al. 2015), China (Juang et al. 2018), and Japan (Hasegawa et al. 2013). Many stud‑ ies also report that an increase in transparency is observed to reduce income that is subject to disclosure (Juang et al. 2018; Mas 2017).1 From the classical viewpoint of public choice, an innate lack of incentives to maximize profit might make gov‑ ernment organizations less efficient (Buchanan and Wagner 1977). Reducing infor‑ mation asymmetry via information disclosure may incentivize a government to be more efficient. Consistent with this view, it is reported that the
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