The Impact of State Disclosure Requirements on Municipal Yields
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.
Volume (Year): 51 (1998)
Issue (Month): n. 4 (December)
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- 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.
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- 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.
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