Title

The housing value-relevance of governmental accounting information.

SelectedWorks Author Profiles:

Wenshan Lin

Document Type

Article

Publication Date

1998

ISSN

0278-4254

Abstract

In this paper, we examine the value-relevance of local government accounting measures of financial condition from the perspective of the citizenry. The Governmental Accounting Standards Board (GASB) has identified citizens as a primary user group for governmental accounting information, albeit from an electoral perspective. However, citizens can express their preferences not only through voting (voice) but also through mobility (exit) (Hirschman, 1970, p.4). In metropolitan areas, citizens typically have a choice of residential location among a number of different local governments. Since homeowner equity represents a substantial portion of all personal wealth, housing values are of significant interest to citizens. We identify local government financial condition as a relevant locational attribute in valuing housing. Although individual citizens generally do not read government financial reports, others (such as members of professional groups) may serve as information search agents for and on behalf of the citizenry (GASB, 1997, para.165). We investigate whether extant local government accounting data (as measures of financial condition) are priced in metropolitan housing markets and whether the association between accounting information and housing values is stronger for local governments with a relatively higher property tax burden. The policy implications of our study are also addressed.

Comments

Citation only. Full-text article is available through licensed access provided by the publisher. Members of the USF System may access the full-text of the article through the authenticated link provided.

Publisher

Elsevier

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.