Determinants of Local Governments’ Transparency in Times of Crisis: Evidence From Municipality-Level Panel Data

• Author: Joaquim Filipe Ferraz Esteves de Araujo,Francisca Tejedo-Romero
• DOI: 10.1177/0095399715607288
• Published date: 01 April 2018
• Date: 01 April 2018
• Subject Matter: Articles

https://doi.org/10.1177/0095399715607288

Administration & Society

2018, Vol. 50(4) 527 –554

© The Author(s) 2015

DOI: 10.1177/0095399715607288

journals.sagepub.com/home/aas

Article

Determinants of

Local Governments’

Transparency in Times

of Crisis: Evidence

From Municipality-Level

Panel Data

Francisca Tejedo-Romero1 and

Joaquim Filipe Ferraz Esteves de Araujo2

Abstract

The global financial crisis has had an impact on Local Government forcing it to

be more transparent in management of public resources. This article examines

theoretically and empirically the determinants of the levels of transparency

in Local Governments based on the agency and legitimacy theories. For the

purpose of this study, the analysis is based on the Spanish municipalities over

a period of 4 years, between 2008 and 2012. Running a random effect panel

data model, our results showed that transparency is associated with economic

and political factors. Unemployment rate, gender, electoral turnout, and

political strength have a significant effect on the level of transparency. For

other variables like investment and fiscal pressure, we did not find significant

evidence of their effect on the level of transparency. We conclude that the

factors that best explain the variation in the level of transparency in the period

of crisis are associated with political factors.

Keywords

transparency, local government, municipalities, panel data, Spain

1University of Castilla-La Mancha, Albacete, Spain

2University of Minho, Braga, Portugal

Corresponding Author:

Joaquim Filipe Ferraz Esteves de Araujo, School of Economics and Management,

University of Minho, Campus de Gualtar, 4710-057 Braga, Portugal.

Email: jfilipe@eeg.uminho.pt

607288AASXXX10.1177/0095399715607288Administration & SocietyTejedo-Romero and Araujo

research-article2015

528 Administration & Society 50(4)

Introduction

In recent times, there is an ongoing pressure for transparency as a mechanism

for improving good governance in Public Administration (PA) (Kaufmann &

Kraay, 2002; Piotrowski, 2007) and increasing the ability of citizens to access

government information (Piotrowski & Van Ryzin, 2007; Roberts, 2006).

The influence of New Public Management (NPM) ideas and recently the

ideas of New Public Governance (Osborne, 2006) changed the traditional

culture of PA opening up organizations and increasing mechanisms of

accountability and transparency (Araújo, 2013; Silvestre, 2010). According

to Cooper and Yoder (2002), transparency is about government decisions,

increasing the effectiveness of government management and looking for

standards of ethics. These aspects of democratic accountability are main

pillars on which PA should be constructed (Lee, 2008).

A key factor in the mechanisms of accountability in PA has been trans-

parency. Transparency becomes an important source for citizens to have a

better understanding of public policies, increase trust of the public, reduce

corruption, and hold officials accountable for their actions and the resulting

outcomes. Transparency is based on the accessibility and disclosure of infor-

mation, which is a public good that improves the functioning of markets

(Albalate, 2013; Stiglitz, 2000).

Interest in transparency is increasing worldwide since the 1990s when

several international organizations recommended that governments should

adopt responsible practices and provide information about their activities

(European Union, 2011; United States Agency for International Development,

2011). This claim is particularly motivated by the need to reduce corruption

and abuse of power in times of austerity.

Local Government transparency is on its first steps and there is a great

deal to do to improve our understanding about it. Local Government

transparency is an understudied subject (Greco, Sciulli, & D’Onza, 2012;

Piotrowski & Bertelli, 2010). Recent studies have examined the determinants

of transparency at Local Government, but theoretical literature has not yet

been consolidated (Albalate, 2013; García-Sánchez, Frías-Aceituno, &

Rodríguez-Domínguez, 2013; Laswad, Fisher, & Oyelere, 2005). Recent

research shows the importance of political and socioeconomic factors to

explain the level of transparency (Alcaraz-Quiles, Navarro-Galera, & Ortiz-

Rodríguez, 2015; Alt, Lassen, & Shanna, 2006; Navarro Galera, de los Ríos

Berjillos, Ruiz Lozano, & Tirado Valencia, 2014; Piotrowski & Van Ryzin,

2007). We have chosen Local Government to conduct our analysis because

problems related to transparency are more frequent at local level, as local

politicians are usually more discrete when it comes to taking decisions

(Cuadrado-Ballesteros, 2014; Guillamón, Bastida, & Benito, 2011).