Premium
Is Management Performance a Factor in Municipal Bond Credit Ratings? The Case of Texas School Districts
Author(s) -
DENISON DWIGHT V.,
YAN WENLI,
ZHAO ZHIRONG JERRY
Publication year - 2007
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/j.1540-5850.2007.00889.x
Subject(s) - bond credit rating , bond , issuer , municipal bond , ordered probit , credit rating , business , control (management) , probit model , probit , actuarial science , test (biology) , finance , accounting , economics , credit risk , econometrics , credit reference , management , paleontology , biology
Municipal bond ratings are an important determinant of interest costs that a bond issuer must pay. The three major bond rating firms profess that economic and management factors are considered in assigning a bond rating. The management component is of particular interest to public administrators because they can exert more direct control over management factors. Management factors have not been studied empirically in the literature because management performance is generally difficult to quantify. However, the public education sector has seen advances in performance measures and at the same time has increasingly relied on municipal bonds to finance construction. The ordered probit estimation provides support that management performance, as measured in the districts performance on standardized test scores and success in student college admission rates, does influence Texas school district bond credit ratings.