How do Accounting Behavior and Public Sector Performance as Predictors the Role of Slack Behavior? Structural Equation Model

Abstract

Introduction: Despite efforts to establish programs and activities in West Java Province, Indonesia, by the Regional People’s Representative Council members and officials, the initiative continues to suffer from inefficiency and waste problems. This study examines the behavior of budget on the accrual basis system from the perspective of regencies and municipalities in the region to ascertain the relationship between behavioral accounting and public sector performance. Method: It proposes a behavioral accounting model, where accounting behavior affects performance through budgetary slack behavior as an intervening variable, and gauges accounting behavior using participatory budgeting, budget target clarity, and organizational commitment. Further, the study conducted a questionnaire survey among subsector-level heads in government departments across 109 offices to test the proposed relationship. Results: The structural equation model indicates that the direct relation between organizational commitment and performance has no significant effect, while other variables have significant direct and indirect effects. Conclusion: Hence, a management system integration is necessary to link public sector management activities to improve performance.