Anyone Monitoring? How Vanishing Local Newspapers Affect Firms’ Debt Structure

36 Pages Posted: 3 Jun 2016 Last revised: 22 Dec 2016

See all articles by Daniel Bias

Daniel Bias

Technische Universität München (TUM)

Thomas Schmid

The University of Hong Kong - Faculty of Business and Economics

Date Written: December 21, 2016

Abstract

This paper sheds light on the economic consequences of newspaper bankruptcies and closures by analyzing how reduced local monitoring due to such "shocks'' affects firms' choice between public and private debt. For this, we compare the impact of newspaper shocks on geographically close firms with weak analyst or nationwide press coverage to firms which are less dependent on local monitoring. We find that reduced local monitoring leads to a shift from public to private debt and higher bond yields for treated firms. For identification, we rely on shocks due to non-local reasons, local matching, and size-corrected treatment measures. These findings indicate that the decline of newspapers will affect firms' financing.

Keywords: Debt structure, public vs. private debt, local monitoring, newspapers

JEL Classification: G30, G32, D82

Suggested Citation

Bias, Daniel and Schmid, Thomas, Anyone Monitoring? How Vanishing Local Newspapers Affect Firms’ Debt Structure (December 21, 2016). Available at SSRN: https://ssrn.com/abstract=2787650 or http://dx.doi.org/10.2139/ssrn.2787650

Daniel Bias (Contact Author)

Technische Universität München (TUM) ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

Thomas Schmid

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
130
Abstract Views
701
rank
234,875
PlumX Metrics