The Influence of Financial Performance Dimensions on Local Government Capital Expenditure Allocation

  • Rusdiah Hasanuddin STIE YPUP, Makassar
  • E. Elpisah STKIP Pembangunan Indonesia, Makassar
  • M. Muslim Universitas Muslim Indonesia, Makassar
Keywords: Degree of Decentralization, Financial Dependency, Financial Independence, GDP Effectiveness, Capital Expenditure Allocation


The purpose of this research is to analyze and to know the effect of degrees of decentralization, financial dependency, financial independence, effectiveness of PAD and the degree of contribution of BUMD to the allocation of capital expenditures of Gowa Regency. This research uses explanative research, which aims to test and obtain empirical evidence of the direct effect of financial performance on the allocation of regional government capital expenditures of Gowa Regency in 2002 until 2016. The data source used is secondary data using multiple linear regression method that is the method of analysis for more than one independent variable. Based on the test results found that the degree of decentralization and financial dependence have a negative and insignificant effect on the allocation of capital expenditure, financial independence has a positive and not significant effect on the allocation of capital expenditure while the effectiveness of PAD and the contribution of BUMD have positive and significant influence on the allocation of capital expenditure. Among the five independent variables, the most dominant effectiveness of PAD (X4) has an influence in the allocation of capital expenditure of the Gowa Regency Government compared to other variables.


Download data is not yet available.


Abbott, A., & Jones, P. (2021). Government response to increased demand for public services: The cyclicality of government health expenditures in the OECD. European Journal of Political Economy, 68, 101988.

Adelina, D. – P., & Roxana, S. (Misa) M. (2016). Financial-Economic Indicators – Vectors of Budgetary Performance. Case Study Romania. Procedia Economics and Finance, 39, 833–839.

Charbel, S., Elie, B., & Georges, S. (2013). Impact of family involvement in ownership management and direction on financial performance of the Lebanese firms. International Strategic Management Review, 1(1), 30–41.

D’Inverno, G., Carosi, L., & Romano, G. (2021). Environmental sustainability and service quality beyond economic and financial indicators: A performance evaluation of Italian water utilities. Socio-Economic Planning Sciences, 75, 100852.

Edwards, M. S., & Thames, F. C. (2007). District magnitude, personal votes, and government expenditures. Electoral Studies, 26(2), 338–345.

Jin, X., Lei, G., & Yu, J. (2016). Government governance, executive networks and enterprise R&D Expenditure. China Journal of Accounting Research, 9(1), 59–81.

Koethenbuerger, M. (2011). How do local governments decide on public policy in fiscal federalism? Tax vs. expenditure optimization. Journal of Public Economics, 95(11), 1516–1522.

Le, H. P. (2020). The energy-growth nexus revisited: the role of financial development, institutions, government expenditure and trade openness. Heliyon, 6(7), e04369.

Mironiuc, M., Carp, M., & Chersan, I.-C. (2015). The Relevance of Financial Reporting on the Performance of Quoted Romanian Companies in the Context of Adopting the IFRS. Procedia Economics and Finance, 20, 404–413.

Mishra, P. K., Parey, A., Saha, B., Samaddar, A., Chakraborty, S., Kaviraj, A., Nielsen, I., & Saha, S. (2022). Production analysis of composite fish culture in drought prone areas of Purulia: The implication of financial constraint. Aquaculture, 548, 737629.

Pan, X., Li, M., Guo, S., & Pu, C. (2020). Research on the competitive effect of local government’s environmental expenditure in China. Science of The Total Environment, 718, 137238.

Ramsbottom, G., Horan, B., Berry, D. P., & Roche, J. R. (2015). Factors associated with the financial performance of spring-calving, pasture-based dairy farms. Journal of Dairy Science, 98(5), 3526–3540.

Ramsbottom, G., Läpple, D., & Pierce, K. M. (2021). Financial benchmarking on dairy farms: Exploring the relationship between frequency of use and farm performance. Journal of Dairy Science, 104(3), 3169–3180.

Roesel, F. (2017). Do mergers of large local governments reduce expenditures? – Evidence from Germany using the synthetic control method. European Journal of Political Economy, 50, 22–36.

Sangha, K. K., Gerritsen, R., & Russell-Smith, J. (2019). Repurposing government expenditure for enhancing Indigenous well-being in Australia: A scenario analysis for a new paradigm. Economic Analysis and Policy, 63, 75–91.

Tang, P., Shi, X., Gao, J., Feng, S., & Qu, F. (2019). Demystifying the key for intoxicating land finance in China: An empirical study through the lens of government expenditure. Land Use Policy, 85, 302–309.

Teker, S., Teker, D., & Güner, A. (2016). Financial Performance of Top 20 Airlines. Procedia - Social and Behavioral Sciences, 235, 603–610.

Turnovsky, S. J., & Fisher, W. H. (1995). The composition of government expenditure and its consequences for macroeconomic performance∗. Journal of Economic Dynamics and Control, 19(4), 747–786.

Ullah, A., Pinglu, C., Ullah, S., Zaman, M., & Hashmi, S. H. (2020). The nexus between capital structure, firm-specific factors, macroeconomic factors and financial performance in the textile sector of Pakistan. Heliyon, 6(8), e04741.

van Wijhe, M., de Boer, P. T., de Jong, H. J., van Vliet, H., Wallinga, J., & Postma, M. J. (2019). Trends in governmental expenditure on vaccination programmes in the Netherlands, a historical analysis. Vaccine, 37(38), 5698–5707.

Wu, S., Li, B., Nie, Q., & Chen, C. (2017). Government expenditure, corruption and total factor productivity. Journal of Cleaner Production, 168, 279–289.

How to Cite
Hasanuddin, R., Elpisah, E., & Muslim, M. (2021). The Influence of Financial Performance Dimensions on Local Government Capital Expenditure Allocation. ATESTASI : Jurnal Ilmiah Akuntansi, 4(2), 291 - 300.