Community Garden Disclosures and Municipal Bond Interest Costs: A Study of New England States

ABSTRACT In this study, we explore whether a municipality’s disclosure of environmental, social, and governance (ESG) initiatives has a positive impact in the municipal bond market. In particular, we investigate the “Environmental and Social” aspects of ESG reporting through the support of Urban Agriculture (UA) related to community gardens. We examine disclosures of support by way of websites and Annual Comprehensive Financial Reports (ACFRs). Motivation for this study comes from a gap in the accounting literature dedicated to the business impacts of municipalities’ sustainability efforts. To address our research question, we collected and analyzed data from general obligation (GO) bond issue reports, websites, and ACFRs for municipalities in New England. We find that disclosing support for community garden initiatives on websites and/or in the ACFR is negatively associated with bond interest costs. This relationship suggests that the government debt market may incorporate this (new type of) nonquantifiable information into investment decisions. Data Availability: Please contact the authors. JEL Classifications: H74; M14; M40; M41; Q15; Q18; Q54; Q56.