Beyond Boilerplate: Analyzing the Dynamics of MD&A Content in State Financial Reports

For over two decades, state and local government financial reports have included MD&A to provide qualitative insights complementing financial statements. However, concerns exist about its generality and lack of year-specific details, with limited research on MD&A content changes. Using computational text analysis, this study measures MD&A similarity over time for all US states (2003–2022) and examines its determinants. Results show that cash and budgetary indicators do not drive revisions, while long-term solvency changes lead to modest increases. State auditor competence is also linked to larger revisions, highlighting the role of administrative expertise in MD&A preparation.