Does the Quality of Financial Advice Affect Prices?

Using a large data sample of 58,562 new municipal issues covering the period from 1984 to 2002, we examine whether the quality of advice provided by a financial advisor affects new issue interest costs. We find that higher quality financial advisors are associated with statistically significant decreases in new issue yields. The effect of advisor quality on yields is more pronounced for revenue, negotiated, and opaque bond issues than for general obligation and competitively sold issues. However, issuers of revenue or negotiated bonds are more likely to choose a low quality advisor.

Financial Review, Vol. 45, Issue 2, pp. 387-414, May 2010

Publication Information
Article Title: Does the Quality of Financial Advice Affect Prices?
Journal: Financial Review (May, 2010)
Vol. 45, Issue 2 pp. 387-414
Author(s): Allen, Arthur C;  Dudney, Donna
Researcher Information
Allen, Arthur C
Allen, Arthur C
Associate Professor
  • Financial Accounting
  • Governmental and Nonprofit Accounting
HLH 445 J
P.O. Box 880488
University of Nebraska-Lincoln
Lincoln, NE 68588-0488, USA
Phone: (402) 472-3275
Fax: (402) 472-4100
Dudney, Donna
Dudney, Donna
Associate Dean of Undergraduate Curriculum and Programs
  • Financial Institutions
  • Financial Markets & Investing
  • Managerial Economics
Office of the Dean
HLH 301 G
P.O. Box 880405
University of Nebraska-Lincoln
Lincoln, NE 68588-0405, USA
Phone: (402) 472-5695
Fax: (402) 472-5180