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Municipal Restatements and Governance
William R. Baber, The George Washington University
Angela K. Gore, The George Washington University
Kevin T. Rich, University of Oregon
Jean Zhang, The George Washington University
ABSTRACT. We investigate whether monitoring by auditors, citizen voters, and councils are associated with the frequency of municipal reporting restatements. We find that municipalities with Big four auditors are significantly less likely to restate, while those that recently switched auditors are significantly more likely to restate. We also find that higher levels of council political competition are positively associated, and a measure of citizen participation is weakly negatively associated with the probability of restatement. Finally, we explore the relation between restatements and a variety of council governance characteristics, including the presence of audit committees, finance committees, council independence, staggered council elections, and the council-manager form of government, and find none are significantly associated with municipal restatements.
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