Business Commons^™

Toward An Understanding Of Year-Over-Year Changes In Municipal Management Discussion And Analysis Disclosures, Kevin Rich, Brent L. Roberts, Joseph Wall, Jean X. Zhang

Accounting Faculty Research and Publications

Using a unique setting in which the standard setter (the Governmental Accounting Standards Board) provides guidance on the content of Management Discussion and Analysis (MD&A) disclosures, we investigate the determinants of content changes in municipal government MD&A. We do so in terms of economic changes, turnover, and regulatory characteristics. We use a sample of 1142 municipal MD&A disclosures from fiscal year 2011 to 2015 to calculate a difference score based on the degree to which municipal MD&As change from the previous year. Our empirical analysis highlights that MD&A content changes vary directly with changes in the unemployment rate, fund balance …

The Foreign Corrupt Practices Act: How Investors Respond When Violation Severity And Corresponding Penalty (Mis)Match, Wioleta Olczak

Accounting Faculty Research and Publications

The Foreign Corrupt Practices Act (FCPA) has become a major focus for corporations, the Securities and Exchange Commission (SEC), and the Department of Justice (DOJ), as indicated by the dramatic increase in the number of FCPA enforcement actions and the level of civil and criminal penalties. Prior regulatory practice shows that the SEC and the DOJ struggle not only to evaluate the severity of a company's FCPA violation, but also to establish the penalty amount. Given the difficulty in assessing penalties, the severity of a company's FCPA violation at times appears mismatched with the size of the penalty. Leveraging signaling …

Linguistic Tone Of Management Discussion And Analysis Disclosures And The Municipal Debt Market, Kevin T. Rich, Brent L. Roberts, Jean X. Zhang

Accounting Faculty Research and Publications

Purpose

As the management discussion and analysis (MD&A) section contains discretionary narrative disclosures regarding a government's yearly financial changes and status, the authors investigate several municipal debt market consequences of linguistic tone within these disclosures.

Design/methodology/approach

The authors textually analyze municipal MD&As with Linguistic Inquiry and Word Count (LIWC) software and develop narrative tone measures based on existing financial-specific dictionaries. Using a final sample of 446 municipal bond issuances from 2012 to 2016, the authors modify the current bond regression models to examine the association between MD&A disclosure tone and future bond interest costs or rating disagreements.

Findings

This study’s …