This study aims to provide empirical evidence of the relevance of information on local government financial reports in Indonesia. Specifically, this study examines whether local government financial report information consisting of infrastructure, liquidity, financial performance, financial position, and debt ratio is useful to explain variations in the performance of local government administration in Indonesia.
The research population is all financial reports of local governments in Indonesia that have been audited by the BPK in 2008-2012. The sampling method used is purposive sampling method. The data analysis tool used in this study is the panel least square.
The results showed that: (1) the variable carrying value (CV) had a positive effect on the performance of local government administration in Indonesia, (2) cash quick ratio (CQ) and debt to revenue (DTR) had a negative effect on the performance of local government administration in Indonesia, (3) return on assets (ROA) and performance government wealth (POSGW) do not affect the performance of local government administration in Indonesia. The results of this study indicate that information on local government financial reports in Indonesia is relevant in decision making.
