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Do ministers matter for audit performance? Evidence from cabinet appointments during South Africa’s ‘State of Capture’

Working paper

Written by Daniel Berliner, Martin Haus, Joachim Wehner

Working paper

Do political leaders affect the audit performance of their organisations? A large literature aims to assess the impact of leaders in both private and public sector settings. Focusing on South Africa, we extend this work to ministers within central government by investigating whether and to what extent they are linked to the audit outcomes of their departments. These audits provide reliable, comparable and objective information on how well an organisation is run. Our empirical approach allows us to separate the role of individual leadership from underlying structural or organisational differences between departments, or time-specific factors. Despite strong audit oversight and institutionalised public financial management practices in South Africa that should serve to minimise individual leader effects, the majority of our empirical tests offer support to the claim that ‘ministers matter’ for audit performance. Leader effects are even stronger among departments involved in social and basic services than among other departments. These findings are robust across a large number of alternative modelling choices, and do not appear to be attributable to leadership transitions that are deliberately timed or targeted based on audit performance. Our study highlights the importance of political leadership for public financial governance, even in relatively highly institutionalised settings.