Good News Travels Better: Report Format, Financial Condition, and Citizen Perceptions of Government Finances

• In Event: State Responsiveness to Citizen Engagement: Effectiveness of Information, Participation, and Social Media

Abstract

Popular financial reports (PFRs) are widely promoted as an accessible alternative to traditional government financial reporting, yet their effectiveness has been tested only under favorable financial conditions. This gap matters because citizens need accessible information precisely when governments communicate difficult fiscal realities: deficits, service cuts, tax increases, or deteriorating fund balances. If PFRs work only when the news is good, the accessible-reporting movement fails at the moment accountability demands it most, when citizens need to understand tradeoffs and hold governments to account. What happens when a PFR delivers bad news? We conducted a pre-registered survey experiment (N≈2,800) with a two-by-two between-subjects design, randomizing both report format (PFR vs. ACFR) and the financial condition disclosed (good vs. poor) for a disguised municipality. We find that PFRs increase citizen understanding and trust, but the effect depends on financial condition. PFRs are more effective at conveying good fiscal news than bad: the format advantage shrinks under fiscal stress, precisely when accessible communication matters most. Information processing fluency mediates the effect of PFR format on understanding, interest, and trust, suggesting that the mechanism operates through ease of comprehension rather than content alone. Analysis of open-ended responses from the same subjects reveals that citizens evaluate government financial reports primarily on visual clarity, personal relevance, ease of access, and time cost, dimensions that current reporting standards do not adequately address. These findings challenge the assumption that PFRs uniformly improve transparency and suggest that report design must account for the fiscal message being delivered, not only the format of delivery. The study contributes to ongoing debates in public finance and public administration about fiscal transparency by demonstrating that format effects interact with fiscal content, advancing behavioral theories of citizen information processing through evidence on processing fluency as a causal mechanism, and informing GFOA and practitioner design standards for how governments communicate fiscal reality to citizens across the full range of conditions they face.

Author

• Zhiwei Zhang, Kansas State University
  Presenting Author