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PurposeAs the management discussion and analysis (MD&A) section contains discretionary narrative disclosures regarding a government's yearly financial changes and status, the authors investigate several municipal debt market consequences of linguistic tone within these disclosures.Design/methodology/approachThe authors textually analyze municipal MD&As with Linguistic Inquiry and Word Count (LIWC) software and develop narrative tone measures based on existing financial-specific dictionaries. Using a final sample of 446 municipal bond issuances from 2012 to 2016, the authors modify the current bond regression models to examine the association between MD&A disclosure tone and future bond interest costs or rating disagreements.FindingsThis study’s empirical analysis suggests that more negative MD&A tone is associated with higher future debt costs and greater future disagreements among bond rating agencies.Practical implicationsOverall, the evidence implies that municipal bond stakeholders use the information in narrative disclosures when evaluating risk, but that the qualitative nature can introduce differences in interpretation between users. Furthermore, additional training in MD&A writing and further standard guidance in MD&A disclosures could improve the MD&A's informativeness for bond market decision-making and state-level monitoring.Originality/valueThis study is first to incorporate narrative tone measures into bond models in a governmental context.

We study the textual content of MD&A disclosures. Specifically, we model the determinants of linguistic tone (based on the fraction of positive or negative words) in municipal MD&A sections and test for associations with the reporting of future internal control weaknesses. Our evidence suggests that factors such as high unemployment, general fund deficits, and less funding from higher levels of government are associated with negative tone, based on a sample of 362 MD&A disclosures in fiscal year 2011. Our internal control analysis is consistent with positive (negative) tone in municipal MD&A disclosures being associated with fewer (more) subsequent-year internal control weaknesses after controlling for other governance, demographic, and performance factors. Our analysis also suggests that positive tone is associated with a lower probability of future general fund deficits. Our findings suggest that municipal MD&A content contains important information regarding the quality of future municipal financial reporting through internal control quality. JEL Classifications: H83.

Synopsis Using a unique setting in which the standard setter (the Governmental Accounting Standards Board) provides guidance on the content of Management Discussion and Analysis (MD&A) disclosures, we investigate the determinants of content changes in municipal government MD&A. We do so in terms of economic changes, turnover, and regulatory characteristics. We use a sample of 1142 municipal MD&A disclosures from fiscal year 2011 to 2015 to calculate a difference score based on the degree to which municipal MD&As change from the previous year. Our empirical analysis highlights that MD&A content changes vary directly with changes in the unemployment rate, fund balance from governmental funds, and auditor turnover. Furthermore, we find evidence that MD&A content changes might be more likely in states without formal GAAP mandates, possibly implying that municipal managers increase transparency by complementing reported financial information with additional qualitative commentary in narrative disclosures when states do not centralize fiscal control over municipalities. Overall, our analysis provides insight on the use of qualitative disclosure by municipal managers, and highlights a need for enhanced commentary on certain items (such as debt and capital expenditures) in order to create greater credibility with and accountability to citizens and other financial statement users. This research is especially timely as GASB re-examines the disclosure mandates of GASB 34.

We investigate relations between the textual content of municipal Management Discussion and Analysis (MD&A) disclosures and future financial reporting. Specifically, we examine the linguistic tone of municipal MD&A disclosures and future financial reporting delays as a proxy for financial reporting quality. Using a sample of 362 municipal MD&A disclosures in fiscal year-end 2011, our empirical analysis suggests that the fraction of positive to total words in municipal MD&A disclosures is associated with timelier financial reporting in the following year after controlling for current report timing and other municipality and governance factors. We interpret our results to suggest that positive language in municipal MD&A disclosures is a signal of confidence in financial reporting quality, indicating that MD&A text contains relevant information in forecasting the quality of future financial reporting for local governments. JEL Classifications: G34; H55; H72.

We consider robust one-way trading with limited information on price fluctuations. Our analysis finds the best guarantee of difference from the optimal offline performance. We provide closed-form solution, and reveal for the first time all possible worst-case scenarios. Numerical experiments show that our policy is more tolerant of information inaccuracy than Bayesian policies, and can earn higher average revenue than other robust policies while keeping a lower standard deviation.

We investigate whether council audit committees relate to municipal fiscal policies. We find that municipalities with audit committees are associated with greater levels of own-source revenue, in that they finance municipal operations with locally raised revenues driven by charges and fees compared to municipalities without audit committees. Furthermore, municipalities with audit committees are associated with less new debt than those without audit committees, indicating more conservative use of external financing. Overall, our results are consistent with municipal audit committees, in addition to monitoring the financial reporting function, playing an advisory role in fiscal decisions, especially when the cost of local government to citizens is high.

With the rapid growth of online social network sites such as Face-book and Twitter, social question and answering (Q&A) has become an important venue for people to seek and share information. However, due to lack of specific Q&A feature design and users' motivations in answering questions, social Q&A has been reported to have a much lower response rate compared with traditional professional Q&A sites such as Stack Overflow and Yahoo! Answers. Recently, WenDa, an emerging social Q&A product built on top of a leading Chinese social website (Sina WeiBo) has been launched to fill this gap. WenDa employs a novel economic model to motivate users to ask and answer questions. In this paper, we conduct an empirical study to understand the effectiveness of this economic model in motivating users to participate in the social Q&A. Besides, we analyze how this economic model and the social user relationships shape the question types as well as question topics. Our observations and study results are of significant values in providing insights for the design and development of social Q&A.

We investigate relations between the textual content of municipal disclosures and future internal control quality. Specifically, we examine whether the linguistic tone of municipal management discussion and analysis (MD&A) disclosures is associated with the likelihood of future internal control weaknesses. Using a sample of 362 municipal MD&A disclosures in fiscal year-end 2011, our empirical analysis suggests that positive (negative) tone in municipal MD&A disclosures is associated with fewer (more) subsequent year internal control weaknesses after controlling for other governance, demographic, and performance factors. Overall, our findings suggest that language in municipal MD&A disclosures plays an important role in signaling confidence in financial reporting systems, indicating that MD&A content contains important information in predicting the quality of future municipal financial reporting.

SYNOPSIS We examine whether unfunded public pension liabilities are associated with citizen oversight through legislative and electoral means in local governments. Our focus on municipal pension plans is timely and relevant, given the prevalence of underfunded pension plans and the GASB's recently issued statements on state and local pension reporting. Using a sample of 84 locally administered municipal defined benefit pension plans in 2009, we find evidence that the level of unfunded pension obligations is negatively associated with both provisions allowing direct citizen participation in the legislative process and electoral voter activism in the form of recent recall attempts. Overall, our empirical evidence is consistent with citizen oversight mechanisms playing an important role in the pension funding decisions of municipal governments. JEL Classifications: G34; H55; H72.

We find that mean municipal debt costs are greater following financial restatement disclosures. Comparisons of the relative use of municipal debt, and of the use of unsecured versus secured debt, corroborate that financial restatements increase the cost of municipal debt financing. Additional analyses indicate that adverse consequences of restatements are mitigated by strong audit oversight and by provisions that encourage direct voter participation in the governance process. The evidence supports the use of restatements as a summary measure of financial reporting quality in the municipal context and informs thinking about auditor and voter oversight in the municipal financial reporting process.

In this paper, we build up a renewable/green energy trading market for users in smart grids. Recently, more and more residential homes are equipped with solar panels to generate and consume renewable green solar energy. Unfortunately, there usually exists a mismatch between the supply and the demand of renewable energy for individual users. Thus, a market in which users can trade surplus green energy in order to serve their future demands is highly desired. In building up such a market, we need to guarantee fairness among non-cooperative users and provide an efficient incentive mechanism based on up-to-date battery and grid technologies. In this work, we propose a market model for trading green energy, design provable efficient incentive algorithms, and conduct experiments on real traces under various performance measures. We conclude that our scheme outperforms existing approaches in terms of fairness while it maintains the best-achievable green energy resource usage.

We investigate a single-leg airline revenue management problem where an airline has limited demand information and uncensored no-show information. To use such hybrid information for simultaneous overbooking and booking control decisions, we combine expected overbooking cost with revenue. Then we take a robust optimization approach with a regret-based criterion. While the criterion is defined on a myriad of possible demand scenarios, we show that only a small number of them are necessary to compute the objective. We also prove that nested booking control policies are optimal among all deterministic ones. We further develop an effective computational method to find the optimal policy and compare our policy to others proposed in the literature.

We investigate whether municipal financial manager turnover is associated with accounting restatements. This analysis is motivated by the notion that suspect financial reporting could limit the ability of stakeholders to assess the use of public resources (GASB, 2006). The evidence suggests that municipalities disclosing accounting restatements are more likely to see changes in the top financial manager position than a control sample of non-restatement municipalities. Overall, our findings are consistent with associations between financial reporting quality and the labor market for municipal financial managers, and imply that governments should consider adding the prevalence of accounting failures as an input in the evaluation of top financial managers.

We investigate whether the presence of municipal audit committees is associated with internal control quality in the municipal setting. The evidence shows that only 20 percent of municipalities in our sample voluntarily maintained an audit committee during the sample period of 2001 through 2004. Our results highlight that municipalities with audit committees are associated with fewer internal control problems, which in turn suggests these cities should be less likely to experience future significant financial reporting failures. These results persist in specifications that use econometric procedures to address concerns about self-selection. Overall, our findings suggest that audit committee presence plays an important role in municipal financial oversight.

This chapter proposes a nonlinear artificial Higher Order Neural Network (HONN) model to study the relation between manager compensation and performance in the governmental sector. Using a HONN simulator, this study analyzes city manager compensation as a function of local government performance, and compares the results with those from a linear regression model. This chapter shows that the nonlinear model generated from HONN has a smaller Root Mean Squared Error (Root MSE) of 0.0020 as compared to 0.06598 from a linear regression model. This study shows that artificial HONN is an effective tool in modeling city manager compensation.

This chapter proposes nonlinear models using artificial neural network models to study the relationship between chief elected official (CEO) tenure and debt. Using Higher Order Neural Network (HONN) simulator, this study analyzes debt of the municipalities as a function of population and CEO tenure, and compares the results with that from SAS. The linear models show that CEO tenure and the amount of debt vary inversely. Specifically, a longer length of CEO tenure leads to a decrease in debt, while a shorter tenure leads to an increase in debt. This chapter shows nonlinear model generated from HONN out performs linear models by 1%. The results from both models reveal that CEO tenure is negatively associated with the level of debt in local governments.

Pancreas ductal adenocarcinoma (PDAC) is a highly lethal cancer that typically presents as advanced, unresectable disease. This invasive tendency, coupled with intrinsic resistance to standard therapies and genome instability, are major contributors to poor long-term survival. The genetic elements governing the invasive propensity of PDAC have not been well elucidated. Here, in the course of validating resident genes in highly recurrent and focal amplifications in PDAC, we have identified Rio Kinase 3 (RIOK3) as an amplified gene that alters cytoskeletal architecture as well as promotes pancreatic ductal cell migration and invasion. We determined that RIOK3 promotes its invasive activities through activation of the small G protein, Rac. This genomic and functional link to Rac signaling prompted a genome wide survey of other components of the Rho family network, revealing p21 Activated Kinase 4 (PAK4) as another amplified gene in PDAC tumors and cell lines. Like RIOK3, PAK4 promotes pancreas ductal cell motility and invasion. Together, the genomic and functional profiles establish the Rho family GTP-binding proteins as integral to the hallmark invasive nature of this lethal disease.