Date of Award

Spring 4-29-2024

Degree Type


Degree Name

Doctor of Philosophy in Business Administration


School of Accountancy

Committee Chair/First Advisor

Benedikt Quosigk

Second Advisor

Sunay Mutlu

Third Advisor

Mary Hill


Governmental financial and operational information influences the decisions made by lawmakers, elected officials, government agency leaders, other governments, debt issuers, grantors, taxpayers, and voters. Governments should demonstrate accountability for public funds (GASB, 1987). Still, government officials' self-interests, particularly career bureaucrats, may affect the accuracy of the information they report, and they can use earnings management to manipulate outcomes using the same discretion inherent in for-profit financial statements. Existing research does not adequately measure or explore the extent of earnings management in state government financial statements in the United States. Though state governments have long reported using fund accounting and the modified accrual basis of accounting, in 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34, requiring states and local governments to include full accrual financial statements as part of the Annual Comprehensive Financial Report (ACFR) (GASB, 2021). This study aims to measure the existence of earnings management within a longitudinal sample of state governments in the United States after the required implementation of GASB Statement No. 34. Using an adapted Jones (1991) and Beck (2018) model, I examine two measures of earnings management in the state ACFRs: discretionary accruals in full accrual financial statements and other financial sources and uses (OFSU) in modified accrual financial statements. I apply various political party control variables to determine if government control affects the magnitude and direction of discretionary accruals in ACFRs. My results show a significant relationship between discretionary accruals and the financial results before discretionary accruals in both full accrual government-wide and modified accrual governmental fund financial statements. Furthermore, my results reveal a significant difference in the use of discretion associated with elected state officials’ political party affiliation.

Available for download on Monday, May 07, 2029

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Accounting Commons