Financial Reporting and Municipal Bond Rating Changes

Posted: 11 Jul 2014 Last revised: 12 Jul 2014

See all articles by K. K. Raman

K. K. Raman

The University of Texas at San Antonio

Date Written: October 1981

Abstract

Municipal bond rating changes can have significant consequences for both borrowers and investors. Multivariate discriminant analysis (MDA) was used to examine whether financial ratios could discriminate between cities that had their ratings upgraded or downgraded from an A rating. In addition, both the upgraded and the downgraded groups of cities were matched, using a paired sample design with a control group to examine the predictive ability of fiscal information. Fiscal variables do appear to be associated with rating revisions. In addition, it appears that rating revisions are more closely associated with operating working capital flow than the "total flow of resources" statement generated by current generally accepted accounting principles (GAAP).

Keywords: Municipal financial reporting, bond rating chages

JEL Classification: M41

Suggested Citation

Raman, K. K., Financial Reporting and Municipal Bond Rating Changes (October 1981). Accounting Review, Vol. 56, No. 4, 1981. Available at SSRN: https://ssrn.com/abstract=2464174

K. K. Raman (Contact Author)

The University of Texas at San Antonio ( email )

One UTSA Circle
San Antonio, TX 78249
United States
210-458-8749 (Phone)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
263
PlumX Metrics