The Freedom of Information Act and Government Financing Costs | Episode No.100

Workshop’s Topic: In the United States, every state has enacted an open information law, commonly known as the Freedom of Information Act (FOIA), which gives any person or organization the right to request access to records from any government agency.

However, the degree of governmental transparency provided by FOIA varies from state to state and over time. We believe that FOIA provides the public with access to government records, thereby reducing information asymmetry between municipal bond investors and local government and facilitating public scrutiny of governments. Using a staggered treatment of FOIA revisions and a stacked regression design, we find that after positive FOIA revisions, the cost of municipal borrowing, as measured by the offering yield and the tax-adjusted offering spread, declines significantly. The effect is observed for both institutional and retail investors, although the decline is larger for retail investors as they likely benefit more from access to government records. Our robustness tests show that the effect is causal and does not depend on the underlying macroeconomic conditions. The effect is also more pronounced in counties with lower social capital or less newspaper coverage and more pronounced for bonds with lower credit ratings or longer maturities. Overall, this paper documents the benefits of FOIA in public finance and contributes to the literature on municipal bonds and information retrieval.

Time and Location: 9:30-12:30 AM (GMT+8), Room A423 (School of Management)

Language: Bilingual (Chinese and English)

Introduction of Speakers

Prof. Nancy Lixin Su

The Hong Kong Polytechnic University, School of Accounting and Finance

Professor Nancy Lixin Su is Head and Full Professor of the School of Accounting and Finance at Hong Kong Polytechnic University. Before returning to PolyU, she taught at Lingnan University. Prof. Su has a broad research interest in disclosure, reporting and auditing. She has also worked creatively in the areas of accounting, supply chains and social networks. Professor Su has published in prestigious accounting journals such as the Journal of Accounting and Economics and The Accounting Review, as well as other business journals including Management Science and Journal of Business Ethics. She is co-editor of the Journal of Contemporary Accounting and Economics and has served as managing editor of the China Accounting and Finance Review and editor of a special issue of Accounting Horizons. She has also served as an examiner for other universities in Hong Kong as well as for the HKICPA Investigation Panel.