We investigate whether issuers that choose to forgo a bond rating suffer an interest cost penalty greater than the cost of the rating. We use estimated ratings provided by Moody's Investor Service to proxy for what the rating would have been if it had been purchased. We find that the primary...

Municipal accounting information is widely believed to be useful to creditors in assessing bond default risk (e.g., Wallace 1985; Wilson and Howard 1985). Users of accounting information perceive that Big 8 auditors provide higher quality audits both for corporations (Shockley and Holt 1983; McKinley et...