Is City Agency With Financial Management Levers Critical for Credit Ratings? An Analysis of Information Transparency and Certification

Christine R. Martell, Mikhail Ivonchyk and Temirlan T. Moldogazíev

Public Budgeting & Finance, 2025, vol. 45, issue 3, 3-20

Abstract: We analyze the ability of city managers in 50 cities across 25 countries to signal credit quality through information transparency and certification channels. We find that city government financial management of cash flows, accounting and auditing practices has a positive and significant impact on credit ratings. Also, city‐level information transparency and certification factors play a significant role in shaping credit quality, showing that financial markets prioritize localized information transparency and certification, and that city governments maintain high credit ratings across many national information contexts. These findings support theory that city governments have agency, meaning substantial independent control, over credit ratings.

Date: 2025
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