Beyond Formal Control:  Intangible Ethical Capital  as an Informal Governance  Mechanism in Public  Financial Reporting

Andi Ambang Syamsuddin; Mursalim Laekkeng; Ratna Dewi; Muhammad Syafii A. Basalamah

doi:10.35551/PFQ_2026_3_7

Authors

Andi Ambang Syamsuddin Universitas Muslim Indonesia
Mursalim Laekkeng Universitas Muslim Indonesia
Ratna Dewi Universitas Muslim Indonesia
Muhammad Syafii A. Basalamah Universitas Muslim Indonesia

DOI:

https://doi.org/10.35551/PFQ_2026_3_7

Keywords:

public financial reporting, intangible ethical capital, accountability, reporting reliability, Bugis local wisdom, H83, M41, D73, Z13

Abstract

Reporting reliability is essential for public accountability and trust, yet formal governance mechanisms such as regulations, audits, and internal controls remain insufficient to fully prevent fraud, waste, and abuse. This study explores how Bugis local wisdom functions as Intangible Ethical Capital in shaping accountability practices and supporting reporting reliability. Using an interpretive phenomenological approach, the study draws on in-depth interviews with 27 informants involved in local government financial management and reporting.
The findings show that the Bugis values of toddopuli temmalara, taro ada taro gau, and resopa temmangingi are internalized as ethical resources that foster moral courage, ethical consistency, and professional diligence. These ethical resources contribute to reporting reliability by guiding accountability behavior and discouraging opportunistic practices. However, their influence is not automatic; the enactment of ethical values is continuously negotiated within organizational environments characterized by hierarchical authority, political pressures, and institutional constraints. The findings further indicate that Intangible Ethical Capital functions as an informal governance mechanism that complements formal governance mechanisms in supporting accountable reporting practices.
This study contributes to public financial governance literature by introducing Intangible Ethical Capital as a conceptual lens for understanding how culturally embedded ethical resources shape accountability practices and reporting reliability. The study suggests that reporting reliability emerges from the interaction between Intangible Ethical Capital and formal governance mechanisms rather than from procedural compliance alone.

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