Management Accounting Section Midyear Meeting

Compensation and Bureaucrat Corruption: Evidence from City Manager Cash Benefits in California

• In Event: Nonprofit and Government

Abstract

I study implications of city managers' cash benefits in the state of California from 2011 to 2017. Cash benefits include lump sum one-time payments, car allowances, meeting stipend, longevity pay, incentive pay and bonus. Using a recent dataset and a municipality fixed effects model, I find consistent evidence that city manager cash benefits are negatively associated with the likelihood of having corruption-related scandals. I fail to find the same relation when studying base salary, total compensation and retirement benefits. These results remain robust in a change model analysis, Heckman two-stage model and using acceptance of federal grants as an exogenous shock. Cross-sectional analyses further suggest that the negative relation is stronger when the city council is more powerful, and the city manager has a longer tenure. Finally, I document that when city managers receive more cash benefits other public employees are also less likely to conduct corruption crimes, cities have more efficient daily operations and city managers likely have involuntary termination.

Author

• Yuan ji, The University of Texas at Arlington