The economic consequences of GASB financial statement disclosure

Michael Dambra, Omri Even-Tov and James P. Naughton

Journal of Accounting and Economics, 2023, vol. 75, issue 2

Abstract: We examine whether Governmental Accounting Standards Board (GASB) financial statement disclosure alters local governments' economic decision-making. To do so, we exploit a recent GASB standard that eliminated differences in the disclosure requirements for county governments' pension obligations. The standard, GASB 68, had no effect on pension economics or the annual budget—it affected only whether and how information was presented on GASB financial statements. Using a broad hand-collected dataset, we document that counties that did not disclose information about their pension obligations before GASB 68 reduced public welfare expenditures, employment, and salary expenses relative to those that had disclosed such information. We conduct extensive field research and employ several cross-sectional analyses to conclude that the effects we document are in part driven by increased awareness of the financial costs of pension obligations by newly disclosing counties.

Keywords: GASB 68; Disclosure; Real effects; Public pension; Managerial learning; Pension accounting (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:75:y:2023:i:2:s0165410122000787

DOI: 10.1016/j.jacceco.2022.101555

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