Infrastructure Reporting and State Bond Ratings

23 Pages Posted: 6 Sep 2017

See all articles by Earl D. Benson

Earl D. Benson

Western Washington University - Finance and Marketing Department

Barry R. Marks

University of Houston, Clear Lake - School of Business and Public Administration

Date Written: Fall 2017

Abstract

Municipal governments are given the choice of two methods for reporting infrastructure assets, the depreciation approach and the modified approach. Using a model that simultaneously estimates a state's bond rating and a state's choice of the modified approach to reporting infrastructure, empirical tests suggest that bond rating agencies evaluate the government‐wide accounting information differently for states that adopt the modified approach compared to states that use depreciation accounting. The use of the modified approach may lead to either a higher or lower bond rating, depending on the level of other accounting measures.

Suggested Citation

Benson, Earl D. and Marks, Barry R., Infrastructure Reporting and State Bond Ratings (Fall 2017). Public Budgeting & Finance, Vol. 37, Issue 3, pp. 89-111, 2017. Available at SSRN: https://ssrn.com/abstract=3031049 or http://dx.doi.org/10.1111/pbaf.12156

Earl D. Benson (Contact Author)

Western Washington University - Finance and Marketing Department ( email )

FMDS Department MS 9077
Bellingham, WA 98225-9077
United States
360-650-3375 (Phone)
360-650-4844 (Fax)

Barry R. Marks

University of Houston, Clear Lake - School of Business and Public Administration ( email )

Houston, TX 77058
United States

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