GASB mandatory disclosure rules and municipal bond yield spreads
The implementation of the Government Accounting Standards Board’s Statement 45 mandates disclosure of “other post-employment benefits” (OPEB) in a standardized format. The mandate provides an opportunity to analyze noninformation impacts of mandatory disclosures, as key components of the information...
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Published in | Review of quantitative finance and accounting Vol. 49; no. 2; pp. 379 - 405 |
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Main Authors | , , , |
Format | Journal Article |
Language | English |
Published |
New York
Springer US
01.08.2017
Springer Nature B.V |
Subjects | |
Online Access | Get full text |
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Summary: | The implementation of the Government Accounting Standards Board’s Statement 45 mandates disclosure of “other post-employment benefits” (OPEB) in a standardized format. The mandate provides an opportunity to analyze noninformation impacts of mandatory disclosures, as key components of the information were already publicly available. We find that this mandate is associated with a significant 15 and 73 basis-point increase in yield spreads among tax-exempt and taxable bonds, respectively. This effect is particularly pronounced for riskier bonds—nonrated and longer maturity taxable bonds. However, states that do not follow the GASB 45 recommendation of prefunding the OPEB obligations face a greater increase in their yield spreads. |
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ISSN: | 0924-865X 1573-7179 |
DOI: | 10.1007/s11156-016-0594-9 |