Voluntary Disclosure Incentives: Evidence from the Municipal Bond Market
33 Pages Posted: 3 Nov 2013 Last revised: 17 Nov 2016
Date Written: April 29, 2016
I investigate the trade-off between capital market incentives, reputational concerns, and administrative costs in the public disclosure decisions of municipal bond issuers. After Ambac's bankruptcy, issuers of insured debt increase disclosure relative to issuers of uninsured debt. After local per capita income declines or expenditures increase, issuers, particularly those with strong electoral incentives and weak voter oversight, reduce disclosure. After the implementation of an online filing repository, issuers with few dissemination channels increase disclosure relative to other issuers. Overall, my findings support a positive relationship between voluntary disclosure, risk, and low-cost dissemination, to the extent reputational capital is not threatened.
Keywords: Voluntary disclosure, Risk, Political economy, Information transmission, Municipal debt
JEL Classification: D72, D81, D83, H74
Suggested Citation: Suggested Citation