Municipal Borrowing Costs and the Differential Impact of Accounting Information Across Rating Categories
Research in Government and Nonprofit Accounting (RIGNA) 1986, 2: 261-273
Posted: 27 Aug 2014
Date Written: 1986
Prior research (Wallace, 1981 Wilson and Howard, 1984) has implicitly assumed that the impact of accounting information on municipal borrowing costs is the same across all bond rating groups. This paper provides empirical evidence that the demand for accounting information is a function of default risk and suggests a means for improving the power of bond default risk models to detect accounting effects.
Keywords: Government borrowing costs, differential impact of accounting information, rating categories
JEL Classification: M41, M42, M48
Suggested Citation: Suggested Citation