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The Impact of State Disclosure Requirements on Municipal Yields

  • Fairchild, Lisa M.
  • Koch, Timothy W.
Registered author(s):

    Municipal bonds are not subject to federal registration requirements imposed upon corporate securities issuers. Instead, each state determines whether municipal issuers must disclose any information and, if disclosure is required, what type of information must be provided. This research examines whether the net interest cost on competitively sold municipals differs across issues in states subject to full disclosure versus states that do not require disclosure. Results indicate that there is no evidence that disclosure requirements screen out risky issues and that net interest cost for nonrated bonds is, on average, approximately 14 basis points less in states with disclosure requirements than in states with no mandatory disclosure. Disclosure is found to have the most significant effect on nonrated bonds.

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    File URL: http://www.ntanet.org/NTJ/51/4/ntj-v51n04p733-53-impact-state-disclosure-requirements.pdf
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    File URL: http://www.ntanet.org/NTJ/51/4/ntj-v51n04p733-53-impact-state-disclosure-requirements.html
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    Article provided by National Tax Association in its journal National Tax Journal.

    Volume (Year): 51 (1998)
    Issue (Month): n. 4 (December)
    Pages: 733-53

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    Handle: RePEc:ntj:journl:v:51:y:1998:i:n._4:p:733-53
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    1. Simon, Carol J, 1989. "The Effect of the 1933 Securities Act on Investor Information and the Performance of New Issues," American Economic Review, American Economic Association, vol. 79(3), pages 295-318, June.
    2. Jarrell, Gregg A, 1981. "The Economic Effects of Federal Regulation of the Market for New Security Issues," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 613-75, December.
    3. Thompson, G Rodney & Vaz, Peter, 1990. "Dual Bond Ratings: A Test of the Certification Function of Rating Agencies," The Financial Review, Eastern Finance Association, vol. 25(3), pages 457-71, August.
    4. L Paul Hsueh & P. R. Chandy, 1989. "An Examination Of The Yield Spread Between Insured And Uninsured Debt," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 12(3), pages 235-244, 09.
    5. Hsueh, L Paul & Chandy, P R, 1989. "An Examination of the Yield Spread between Insured and Uninsured Debt," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 12(3), pages 235-44, Fall.
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