Association for Public Policy Analysis & Management

The municipal structure (mayor-council or council-manager) is a widely focused research topic among previous public administration and management research. Challenges that exist in the municipal structure research include the difficulty of classifying municipal forms accurately and practically, the lack of convincing theories to explain the effects of municipal structures, the unavailability of long-term panel data that can be utilized to empirically analyze the effect of municipal structures, and the defects in methodologies in carrying on empirical research. The author in this research tries to confront these challenges and to fill in some of the gaps in this research topic. First, this research focuses on the influence of municipal structures on government fiscal performance through the usage of the municipal general obligation bond ratings as a performance measurement. Previous studies have tried to demonstrate the significant influence of municipal structures on government performance, while few of them adopted an appropriate measurement and produced the evidence to assess the proposition. Second, the author disregards the dichotomous categorization of the municipal structure as mayor-council or council-manager and tries to synthesize the three main methods of sub-categorizing municipal structures from previous studies. Third, the principal-agent theory will be employed as the theory for explaining the effect of municipal structures on government fiscal performance. Fourth, the author adopts the instrumental variable (IV) and regression discontinuity (R&D) methods to conduct the empirical research. Finally, on the data, unlike the usage of one-year cross-sectional or survey data in most of the previous studies, the author adopts a panel database of the seven Municipal Form of Government surveys (one survey every five years from 1981 to 2011) built by the International City/County Management Association (ICMA). The preliminary empirical results show that municipal structures are capable of influencing government fiscal performance, indicated by impacting municipal general obligation bond ratings, through the mechanism of professional management.