The GFOA Certificate Revisited: Excellence in Financial Reporting and the Costs and Benefits of High Disclosure

30 Pages Posted: 21 May 2020

See all articles by Kenneth N. Daniels

Kenneth N. Daniels

Daniels Foundation for Impact Investments and Development

Date Written: January 3, 2007

Abstract

We examine the relationship between disclosure as evidenced by the possession of the GFOA certificate for excellence in financial reporting (COA) and the cost of debt in the municipal bond market. Using a large database of tax-exempt municipal bonds issued by cities during 1994-2003, we find a statistically and economically significant relationship showing that disclosure reduces borrowing costs. We also find that compensation for city administrators and chief financial officers of cities attaining the COA is significantly higher than compensation for officials in cities without the COA. Overall, cities derive financial benefits that exceed the costs of obtaining the COA.

Keywords: Disclosure, Municipal Bonds, Governance

Suggested Citation

Daniels, Kenneth N., The GFOA Certificate Revisited: Excellence in Financial Reporting and the Costs and Benefits of High Disclosure (January 3, 2007). Available at SSRN: https://ssrn.com/abstract=3584073 or http://dx.doi.org/10.2139/ssrn.3584073

Kenneth N. Daniels (Contact Author)

Daniels Foundation for Impact Investments and Development ( email )

New Jersey, NJ 07018
United States

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