Does Fiscal Monitoring Make Better Governments? Evidence from US Municipalities

Nakhmurina, Anya

doi:10.2139/ssrn.3293340

Cited by 16 publications

(46 citation statements)

References 78 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…We acknowledge that a limitation of this analysis is that we cannot obtain data for all local government elections. However, our sample size is comparable to recent studies (e.g., Nakhmurina [2019]). In total, we obtain data on 4,641 elections that take place during our sample period.…”

Section: Local Elections and Stewardshipsupporting

confidence: 76%

Politically Connected Governments

Cuny

Kim

Mehta

2020

J of Accounting Research

View full text Add to dashboard Cite

This paper examines the consequences of powerful political connections for local governments. We find that governments located within the constituencies of, and thus connected to, powerful congressional members reduce their stewardship over public resources. Using plausibly exogenous declines in the power of congressional representation, we show that the effect is causal. To better understand why connected local governments can reduce stewardship, we study electoral characteristics. Our findings suggest that the increased resources that come with powerful congressional representation allow local-government officials to reduce stewardship without material adverse effects on their reelection prospects. In sum, we provide evidence of a cost of

show abstract

Section: Local Elections and Stewardshipsupporting

confidence: 76%

Politically Connected Governments

Cuny

Kim

Mehta

2020

J of Accounting Research

View full text Add to dashboard Cite

show abstract

“…Cuny [2016] evaluates the benefits of municipal disclosure, relative to political incentives, and finds that, while disclosure provides capital market benefits, politicians’ re‐election concerns inhibit the disclosure of bad news. Finally, Nakhmurina [2018] documents that state fiscal monitoring increases the quality of municipal disclosure.…”

Section: Background and Related Literaturementioning

confidence: 99%

“…We also investigate the role of direct regulatory enforcement on issuers’ continuing disclosure. Nakhmurina [2018] demonstrates that fiscal monitoring at the state level improves the timeliness of municipal disclosures and generally improves reporting quality, which suggests that direct regulatory enforcement can improve issuers’ compliance with disclosure requirements. We examine municipal entities that receive federal funding in excess of $750,000, which are subject to the Single Audit Act that requires issuers to provide annual audited financial statements to the federal government.…”

Section: Institutional Setting and Hypothesis Developmentmentioning

confidence: 99%

The Effect of Credit Ratings on Disclosure: Evidence from the Recalibration of Moody's Municipal Ratings

Gillette

Samuels

Zhou

2020

J of Accounting Research

View full text Add to dashboard Cite

This paper examines how credit rating levels affect municipal debt issuers' disclosure decisions. Using exogenous upgrades in credit rating levels caused by the recalibration of Moody's municipal ratings scale in 2010, we find that upgraded municipalities significantly reduce their disclosure of required continuing financial information, relative to unaffected municipalities. Consistent with a reduction in debtholders' demand for information driving these results, the reduction in disclosure is greater when municipal bonds are * Sloan School of Management, MIT; † The Wharton School, University of Pennsylvania.Accepted by Christian Leuz. We gratefully acknowledge helpful comments and suggestions from John Core, held by investors who relied more on disclosure ex ante. However, we also find that the reduction in disclosure does not manifest when issuers are monitored by underwriters with greater issuer-specific expertise and when issuers are subject to direct regulatory enforcement through the receipt of federal funding. Overall, our results suggest that higher credit rating levels lower investor demand for disclosure in the municipal market, and highlight the role of underwriters and direct regulatory enforcement in maintaining disclosure levels when investor demand is low. JEL codes: G24; G28; H74; M40; M41

show abstract

“…Their case studies indicate that the municipalities used benchmarking tool data to inform policy decisions that yielded improvements in their long-term financial position. More broadly, Nakhmurina (2019) studies fiscal monitoring programs similar to the North Carolina program instituted across several states, reporting considerable evidence that they facilitate improved financial performance and governance among monitored local governments. We summarize the improvement hypothesis below:…”

Section: Theoretical Framework and Hypothesesmentioning

confidence: 99%

Can Employee Training Influence Local Fiscal Outcomes?

Spreen

Afonso

Gerrish

2020

The American Review of Public Administration

View full text Add to dashboard Cite

Employee training is often viewed as essential for incorporating performance management practices into public organizations, but few studies directly link training programs to subsequent changes in organizational outcomes. Typically, evaluations of the impact of training and management innovations more broadly focuses narrowly on improvements at the mean of the distribution, ignoring isomorphic pressures that may spur divergent responses at opposite tails of the distribution. We examine these notions by testing whether training local government personnel on the use of financial performance information in decision-making influences fiscal outcomes. Specifically, we compare the outcomes of North Carolina local governments whose employees participated in training on a new fiscal benchmarking tool at the University of North Carolina School of Government to peer governments that did not participate. Municipal governments with at least one trained employee experienced modest changes, on average, across most of the financial ratios reported in the benchmarking tool. By comparison, the dispersion of the reported outcomes declined considerably among municipal governments whose employees participated in training in comparison to control governments. The strength of this response increased with the number of public officials trained. The results indicate that employee training can facilitate the use of performance benchmarking systems in public sector decision-making. They also suggest that benchmarking without explicit performance targets may encourage convergence toward the average outcome.

show abstract

Does Fiscal Monitoring Make Better Governments? Evidence from US Municipalities

Cited by 16 publications

References 78 publications

Politically Connected Governments

Politically Connected Governments

The Effect of Credit Ratings on Disclosure: Evidence from the Recalibration of Moody's Municipal Ratings

Can Employee Training Influence Local Fiscal Outcomes?

Contact Info

Product

Resources

About