Partisan Cities: How State-Local Political Alignment Shapes Credit Risk and Information Processing in the Municipal Bond Market

• 成果类型: Article
• 署名作者: Dagostino, Ramona; Nakhmurina, Anya
• 署名单位: University of Virginia; Yale University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456; 1475-679X
• DOI: 10.1111/1475-679x.70041
• 发表日期: 2026-09
• 页码: 1733-1770
• 关键词: Municipal bonds; partisanship; political economy; political connections; Credit risk; financial reports; single audits; matter; debt; COSTS

摘要

This paper studies how partisan alignment between city leaders and state governors shapes information processing and bond pricing in the municipal bond market. Using a novel data set on 1,045 U.S. cities from 2005 to 2019, we show that cities with the same political affiliation as the state governor face 9 basis points lower borrowing costs than misaligned cities. The effect is stronger for riskier bonds, in states where governors hold greater authority, and for fiscally dependent cities. Aligned cities also receive more aid during fiscal distress. Partisan alignment shapes how investors interpret and respond to financial information: Nondisclosure and adverse audit findings raise borrowing costs primarily for misaligned cities, while penalties for aligned cities are markedly smaller.