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Indiana University

Martin J. Luby


Public Affairs

Exam and Minor Fields:

Major: Public Finance and Public Management
Minor: Political Science

Special Skills and/or Knowledge Base:

In addition to my doctoral research and teaching, I have over 12 years of professional experience in the public finance industry having been most recently employed for seven years as a senior vice president in the national public finance advisory firm Scott Balice Strategies (SBS) where I directed the firm’s public policy research practice. SBS is an independent, woman-owned full service financial advisory firm providing strategic financial services to leading governments, corporations, and nonprofit organizations throughout the world. My primary focus at SBS was on financial strategy assignments including modeling and structuring capital finance programs, pricing bond and derivative transactions, authoring debt and swap policies, and addressing the public policy implications of emerging finance techniques and public-private partnership transactions. Prior to my employment at Scott Balice Strategies, I worked as a public finance investment banker at Bear Stearns & Co. Inc. At Bear Stearns, I structured and helped price over $1 billion in financings for several Midwestern issuers including the Illinois Student Assistance Commission, the State of Illinois, and the City of Chicago. In both of these practitioner public finance positions, I learned a great deal about many of the specific public policy challenges facing state and local governments across the country. This knowledge significantly informs my academic activities as it relates to both teaching and research. Specifically, I believe the ability to draw upon such specialized knowledge will substantially enhance the quality of my classroom teaching in a public affairs program and will help me pursue and develop a “policy relevant” research agenda that is in concert with many policy and management schools.

Dissertation Title:

Agency Problems in Public Financial Management: Evidence from Debt Refinancing Practices

Dissertation Committee:

  • Dr. Craig Johnson (chair)
  • Dr. Kurt Zorn
  • Dr. David Reingold
  • Dr. Sergio Fernandez

Current Dissertation Progress and Expected Defense Date:

Progress: Most data collection completed and some data analysis completed. One chapter written and sent out for publication.
Expected Defense Date: May 2010

Dissertation Abstract:

In recent years several state and local governments have reformed their financial management practices by placing greater restrictions on the sale and management of government debt including practices related to debt refinancing. However, there is concern that these debt restrictions may not be costless. That is, they may lead to more prudent management of government debt in certain circumstances but, at other times, debt restrictions, including limits on bond refinancing, may unduly restrict public financial managers and lead to a less efficacious debt management program thus undermining the principal’s goals. Utilizing descriptive research, this study begins by generally examining the debt refinancing practices and trends of state and local governments over the last few decades as a means of providing general context to the main research area at hand. Next, the study applies event analysis from the State of Illinois to investigate the efficacy of statutory restrictions related to bond refinancing practices, a subtle but important area of debt management. Given the potential costs of these debt refinancing restrictions, this study then proceeds to empirically investigate two common decisions in this area of debt management, the refinancing savings structure decision and the decision on bond interest rate mode (fixed or synthetic fixed), to determine whether there is evidence of a pervasive principal-agent problem that would warrant the use of restrictive public managerial control mechanisms in the area of bond refinancing. This research’s empirical analysis of bond refinancing attempts to shed light on managerial decision-making in an area of public financial management that generally lacks transparency yet offers bureaucratic autonomy and, thus, investigates a policy area where, at least theoretically, agency problems are most likely to be common and pervasive if they do in fact exist.