Transparency in State Debt Disclosure

42 Pages Posted: 9 Nov 2017

See all articles by Bo Zhao

Bo Zhao

Federal Reserve Bank of Boston

Wen Wang

Rutgers, The State University of New Jersey - Rutgers University, Newark

Date Written: 2017-10-01

Abstract

We develop a new measure of relative debt transparency by comparing the amount of state debt reported in the annual Census survey and the amount reported in the statistical section of the state Comprehensive Annual Financial Report (CAFR). GASB 44 requires states to start reporting their total debt in the CAFR statistical section in FY 2006. However, states are allowed to use accounting choices to exclude some dependent agencies’ debt, which contributes to a gap between the two data sources. The regression results suggest that the gap tends to increase when states face greater fiscal stress or less political competition. Such patterns are not found in the pre-GASB 44 period.

Keywords: fiscal transparency, state debt, GASB, accounting choices, dependent agencies

JEL Classification: H74, H83

Suggested Citation

Zhao, Bo and Wang, Wen, Transparency in State Debt Disclosure (2017-10-01). FRB of Boston Working Paper No. 17-10. Available at SSRN: https://ssrn.com/abstract=3067936

Bo Zhao (Contact Author)

Federal Reserve Bank of Boston ( email )

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HOME PAGE: http://sites.google.com/site/bozhao/

Wen Wang

Rutgers, The State University of New Jersey - Rutgers University, Newark ( email )

180 University Avenue
Newark, NJ 07102
United States

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