Date of Award

8-9-2016

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Public Management and Policy

First Advisor

W. Bartley Hildreth

Second Advisor

Gregory B. Lewis

Third Advisor

Ross Rubenstein

Fourth Advisor

David L. Sjoquist

Fifth Advisor

Hadiye Aslan

Abstract

This three-essay dissertation attempts to fill research gaps in three streams of literature on municipal debt management. The first essay examines whether stability of debt management networks lowers issuers’ borrowing costs in primary markets for municipal bonds. The analytical design combines social network theory and cross-sectional modeling and centers on state debt management networks in California. Findings show that beyond a critical threshold of stability, municipal borrowing costs tend to decrease as networks become more stable. The second essay analyzes strategic refinancing decisions in primary markets for municipal bonds. It focuses on school district debt refinancing transactions in Texas and uses Monte Carlo simulation and financial option-pricing techniques to quantify the opportunity costs, or option value loss, associated with the timing of transactions. Findings show that school district refinancing transactions resulted in option value loss equivalent to millions of dollars. In the third essay, I investigate the extent to which regulatory interventions in municipal bond secondary markets reduce inefficiencies in securities pricing. I analyze trade price impacts of the 2008 implementation of new disclosure interventions. Results from time series estimations of California data show that the interventions reduced pricing inefficiencies in secondary markets as a whole; however, institutional investors continue to have a marginal price advantage over retail investors. The three essays shed more light on the efficient level of interdependence in debt management networks, present an empirical framework for evaluating the timing of refinancing transactions, and offer insights that should guide regulatory policy discussions on fair pricing of securities.

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