This paper contributes to the scarce literature on government transparency by analysing the impact of political and socio-economic factors on municipal financial transparency. Our sample covers the 100 largest Spanish municipalities in 2008. Compulsory publicity and transparency are key to public management (rule-of-law theory). Our data show that Spanish municipalities are providing financial information beyond the legal requirements, thus exceeding the compulsory disclosures required by the rule-of-law theory. The more taxes and more transfers per capita, the more financial information is disclosed and, accordingly, the higher the transparency is. Therefore the municipalities are not taking advantage of fiscal illusion or principal–agent effects, since they are not concealing higher levels of taxes and transfers from citizens. Furthermore, left-wing parties are more transparent than right-wing ones. Finally, the population also has a positive effect on the achievement of financial transparency.

This article, investigates efficiency in the municipal sector of the Region of Murcia (Spain). With that aim, data of 31 municipalities (69% of the response rate) have been collected. Services analysed are: police, culture, sports, green areas, refuse collection and water supply. Ratios of efficiency have been related to other control variables, such as economic level, size of the municipality, decentralization, political sign and financial situation. A weak positive relation between economic level and efficiency arises. Some weak evidence also exists that public management of refuse collection is more efficient than private. In water supply, public management by means of a company controlled by the local government is clearly more efficient than private. It also seems that the higher the tax burden, the greater the efficiency in providing services.

Public finance theories state that both political and socioeconomic factors must be considered in order to explain governments' finances. On the one hand, “partisan politics matters” thesis argues that progressive parties contribute to increase public deficit. On the other hand, Roubini and Sachs' weak government hypothesis ( 1989a Roubini , N. and J. D. Sachs . 1989a . “Political and Economic Determinants of Budget Deficits in the Industrial Democracies.” European Economic Review 33 : 903 – 938 . [Crossref], [Web of Science ®] [Google Scholar] , 1989b Roubini , N. and J. D. Sachs . 1989b . “Government Spending and Budget Deficits in the Industrial Countries.” Economic Policy: A European Forum 8 : 99 – 132 . [Crossref] [Google Scholar] ) states that the higher the government fragmentation, the higher spending, deficit and debt. Accordingly, our work evaluates whether municipal ideology and political strength have an impact on public expenditures and taxes. With this aim, we analyze a representative sample of Spanish municipalities (2,729) for the year 2005. We find an influence of the size of the political majority on the municipal financial situation. However, we do not find evidence of the impact of the government's political ideology. Economic and population variables are found highly significant. Our data also show a “flypaper” effect in the Spanish municipal sector.