Municipal Government Financial Reporting: Administrative and Ethical Climate

Abstract

This article examines financial disclosure in U.S. cities. It considers factors that affect the level of municipal financial disclosure, in particular the effect of administrative factors. It finds that participation in the Government Finance Officers Association Certificate of Excellence in Financial Reporting program, and the Chief Financial Officer's familiarity with the activities of the Governmental Accounting Standards Board are positively associated with more disclosure. These latter factors are interpreted as measures of professionalism and are furthered by the adoption of municipal codes of ethics which stress openness and responsiveness to stakeholder interests. Such general policies are indirectly associated with heightened levels of financial disclosure. Financial disclosure is also associated with city size and demands from capital markets.