The effect of mandatory, secondary-municipal-bond-market disclosure requirements on the United States municipal bond market: The amended Securities Exchange Act, Rule 15C2-12 of 1994

Date of Award


Degree Type


Degree Name

Doctor of Philosophy (PhD)


Public Administration


Bernard Jump Jr.


municipal bond, market disclosure, amended Securities Exchange Act, Rule 15C2-12 of 1994

Subject Categories

Accounting | Finance and Financial Management | Public Administration


Unlike the corporate securities market, where issuers are required to disclose updated information on a regular basis after an initial sale, the municipal bond market has traditionally operated without any formal requirement for ongoing disclosure. As a result, even professional market participants to say nothing of individual investors have often faced substantial barriers in obtaining financial information about borrowers on an ongoing basis.

However, the lack of secondary market disclosure may have been reduced as a result of the amended Securities Exchange Act Rule 15c2-12 ("the amendment") after July 3, 1995. The amendment prevents underwriters from underwriting and recommending municipal securities, for which secondary market information is not provided continually; and also requires issuers to provide that information to repositories.

The purpose of this dissertation is to determine the value the market for municipal debt places on the reduction of information deficiency resulting from the amendment. The central hypothesis tested is that municipal bond investors will be willing to accept a lower interest rate for bonds issued after July 3, 1995, ceteris paribus, than they would for those issued before the amendment's effective date.

To test this hypothesis, this dissertation applies date-of-issuance dummies with multiple regressions.

In the primary market analysis, the result supports the hypothesis, by showing 0.098% borrowing cost drop after July 3, 1995. In the secondary market, this study does not find any statistically significant difference.

However, this study illustrates that the conflicting results between the two markets may not be contradictory. The study finds that the issuers in the two markets are not the same. The issuers of the bonds, in the primary market analysis, did not disclose well before the amendment. In contrast, the issuers of the bonds that were actively traded in the secondary market had disclosed well even before the amendment.

Therefore, the unexpected result of the secondary market analysis is not consistent with the findings for the primary market: The degree of the impact of the amendment expressed by interest cost savings depend on the existence and magnitude of information deficiency between issuers and investors before the amendment.


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