Date of Award

Fall 2021

Document Type


Degree Name

Doctor of Business Administration (DBA)

Committee Chair

Steven G. Johnson


The process when U.S. municipalities retire callable bonds early and refinance them with bonds of a lower coupon rate is called advance refunding. The advance refunding of debt is a widespread practice in municipal finance; however, the Tax Cuts and Jobs Act of 2017 removed the option to keep this debt tax-exempt and now requires municipalities to convert from tax-exempt to taxable. The purpose of this research was to evaluate the impact eliminating advance refunding of municipal debt into tax-exempt status has on the municipality’s advance refunding decision making process, specifically at the state level. Municipal governments are still adjusting to the new market dynamics after passage of the tax legislation and have demonstrated a change in their debt management decisions regarding advance refunding, even in the low interest rate environment existing at the time of this study. To capture this change in behavior, both economic and bond data between 2005 and 2020 were collected across multiple database platforms. Panel and hierarchical regression models were used to evaluate the time periods before and after the Tax Cuts and Jobs Act as well as economic regions within the United States. These models incorporated state-specific variables to evaluate macroeconomic frictions, a departure from prior studies where researchers evaluated advance refunding from an aggregate approach of all municipal levels of government and lacked a public finance approach. Analysis showed that geography played a significant role in the evaluation of advance refunding activity and state tax revenue served as a primary driver of state debt management decisions in the existing regulatory environment. These findings are extremely valuable for policy makers and participants in the municipal bond markets because interest rates are expected to rise in future years.

Creative Commons License

Creative Commons Attribution-Noncommercial 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial 4.0 License