Does Law 190/2012 impact on the MOEs cost of debt? First exploratory evidence from the Italian scenario

This study examines the impact of Law 190/2012 on the cost of debt for Municipality-Owned Enterprises (MOEs). Specifically, it investigates whether the "Three-Year Anti-Corruption Plan" reduces information asymmetry for external stakeholders and how this, in turn, influences financial performance. The study employs a two-stage approach. First, content analysis is conducted to assess the quality of information disclosed in the "Three-Year Anti-Corruption Plan" as mandated by Law 190/2012. Second, a difference-in-differences regression analysis evaluates the law's effect on MOEs’ cost of debt. The content analysis reveals that the anti-corruption documents effectively mitigate information asymmetry by providing sufficient and relevant disclosures. The difference-in-differences analysis indicates a significant association between anti-corruption disclosures and financial performance, with a negative impact on the cost of debt. Additionally, this effect is positively moderated by the perceived level of corruption, suggesting that the combined influence of Law 190/2012 enforcement and corruption perception amplifies the reduction in the cost of debt. The findings suggest that anti-corruption disclosures enhance external stakeholders’ trust in MOEs, reducing information asymmetry and subsequently lowering the cost of debt. These results offer valuable insights for managers and policymakers. However, the study is limited to the Italian context, which may restrict the generalizability of its findings. To the best of the authors’ knowledge, this is the first study to explore the relationship between the quality of anti-corruption disclosures and the cost of debt, providing novel insights into the role of transparency in public-sector financial performance.