GASB 34's Information Relevance: Evidence from New Issue Local Government Debt

37 Pages Posted: 15 Apr 2010

Date Written: April 14, 2010


I examine the relevance to credit analysts and investors of information presented in the government-wide financial reports of municipalities. Government-wide, accrual-basis measures such as those required by GASB Statement 34 are potentially useful for assessing local government credit quality and pricing local government bonds because most local governments have capital-intensive infrastructure assets. I examine information relevance in the context of municipal bond credit analysis, primary market pricing, and secondary market pricing of new issue municipal bonds. I find that government-wide financial information does have incremental value relative to traditional fund-based measures. However, I also find that fund-based measures are far more relevant for assessing default risk and for pricing new issue municipal bonds. The clearest evidence of information relevance of the government-wide information for pricing efficiency in the secondary market. These results have implications for our understanding of the implications of accrual-basis accounting in US governments.

Keywords: Governmental Accounting, Capital Markets, Debt Management, GASB 34

JEL Classification: G12, H74, M40

Suggested Citation

Marlowe, Justin, GASB 34's Information Relevance: Evidence from New Issue Local Government Debt (April 14, 2010). Available at SSRN: or

Justin Marlowe (Contact Author)

University of Washington ( email )

Box 353055
Seattle, WA 98195
United States
206.221.4161 (Phone)


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