THE EFFECT OF LOCAL GOVERNMENT LEADER CHARACTERISTICS AND AUDIT OPINION ON LOCAL GOVERNMENT PERFORMANCE AND ITS IMPLICATIONS ON HUMAN DEVELOPMENT INDEX IN WEST NUSA TENGGARA

Abstract

This research aims at examining the effect of local government leader characteristics and audit opinion on the performance of local governments and its implications on human development index in Nusa Tenggara Barat. A Score of Local Government Performance Evaluation (EKPPD) was applied as a proxy for the Local Government Performance. The sample was 10 districts of the province during the period 2011-2015. The analytical tool was path analysis using Partial Least Square. The test results showed that the local government leader characteristics such as age, years of service, and education level do not affect the local government’s performance. Meanwhile the audit opinion has a significant effect on the local government’s performance; hence the local government’s performance has a significant effect on the human development index. This research accordingly implied that Upper Echelon Theory which is stated that the local government leader characteristics influence the local government’s performance was unjustified. In other side, the researched finding supported the Signaling Theory in which the audit opinionsinfluenced the performance of local governments. This study was practically considered as the efforts to foster human development in term of developing the local governments performance; which was initiated by an improvement in the audit opinion.