  I examine whether the imposition of fiduciary duty on municipal advisors
affects bond yields and advising fees. Using a difference-in-differences
analysis, I show that bond yields reduce by $\sim$9\% after the imposition of
the SEC Municipal Advisor Rule due to lower underwriting spreads. Larger
municipalities are more likely to recruit advisors after the rule is effective
and experience a greater reduction in yields. However, smaller issuers do not
experience a reduction in offering yields after the SEC Rule. Instead, their
borrowing cost increases if their primary advisor exits the market. Using novel
hand-collected data, I find that the average advising fees paid by issuers does
not increase after the regulation. Overall, my results suggest that while
fiduciary duty may mitigate the principal-agent problem between some issuers
and advisors, there is heterogeneity among issuers.
