Accounting restatements, governance and municipal debt financing

William R. Baber, Angela K. Gore, Kevin T. Rich and Jean X. Zhang

Journal of Accounting and Economics, 2013, vol. 56, issue 2, 212-227

Abstract: We find that mean municipal debt costs are greater following financial restatement disclosures. Comparisons of the relative use of municipal debt, and of the use of unsecured versus secured debt, corroborate that financial restatements increase the cost of municipal debt financing. Additional analyses indicate that adverse consequences of restatements are mitigated by strong audit oversight and by provisions that encourage direct voter participation in the governance process. The evidence supports the use of restatements as a summary measure of financial reporting quality in the municipal context and informs thinking about auditor and voter oversight in the municipal financial reporting process.

Keywords: Accounting restatements; Municipal governance; Municipal debt (search for similar items in EconPapers)
JEL-codes: G12 H11 H74 H83 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (20)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:56:y:2013:i:2:p:212-227

DOI: 10.1016/j.jacceco.2013.08.003

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