This paper provides an empirical test of the association between the MFOA Certificate of Conformance and creditor decisions in the market for new municipal bond issues. We report that the certificate does have information content for creditor decisions, particularly for medium quality bonds

State and local governments are not subject to Securities and Exchange Commission (SEC) regulations requiring compliance with generally accepted accounting principles (GAAP). It was only in 1980 that Standard & Poor's issued a policy statement indicating a failure to conform with GAAP would be...