The Economic Consequences of GASB Financial Statement Disclosure

66 Pages Posted: 9 Mar 2020 Last revised: 10 Jan 2022

See all articles by Michael Dambra

Michael Dambra

SUNY at Buffalo - School of Management

Omri Even-Tov

Haas School of Business - UC Berkeley

James P. Naughton

University of Virginia, Darden School of Business

Date Written: February 9, 2020

Abstract

We examine whether Governmental Accounting Standards Board (GASB) financial statement disclosure alters local governments’ economic decision-making. To do so, we exploit a recent GASB standard that eliminated differences in the disclosure requirements for pension obligations for county governments. The standard, GASB 68, had no effect on pension economics nor the annual budget—it only affected whether and how information was presented on GASB financial statements. Using a broad hand-collected dataset, we document that counties that did not disclose information about their pension obligations pre-GASB 68 reduced public welfare expenditures, employment, and salary expenses relative to those that had disclosed such information. We conduct extensive field research and employ several cross-sectional analyses to conclude that the effects we document are likely driven by increased awareness of the financial costs of pension obligations by newly disclosing counties.

Keywords: GASB 68, Disclosure, Real effects, Public pension, managerial learning

JEL Classification: M41, M48, H7

Suggested Citation

Dambra, Michael and Even-Tov, Omri and Naughton, James P., The Economic Consequences of GASB Financial Statement Disclosure (February 9, 2020). Available at SSRN: https://ssrn.com/abstract=3538354 or http://dx.doi.org/10.2139/ssrn.3538354

Michael Dambra (Contact Author)

SUNY at Buffalo - School of Management ( email )

350 Jacobs Management Center
Buffalo, NY 14260-1660
United States
716-645-3237 (Phone)

Omri Even-Tov

Haas School of Business - UC Berkeley ( email )

Haas School of Business
Berkeley, CA 94720
United States
3104302236 (Phone)

James P. Naughton

University of Virginia, Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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