Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance
47 Pages Posted: 15 May 2018
Date Written: May 8, 2018
Local newspapers hold their governments accountable. We examine the effect of local newspaper closures on public finance for local governments. Following a newspaper closure, we find municipal borrowing costs increase by 5 to 11 basis points in the long run. Identification tests illustrate that these results are not being driven by deteriorating local economic conditions. The loss of monitoring that results from newspaper closures is associated with increased government inefficiencies, including higher likelihoods of costly advance refundings and negotiated issues, and higher government wages, employees, and tax revenues.
Keywords: media, monitoring, public financing, municipal bonds
JEL Classification: G12, G18, H74
Suggested Citation: Suggested Citation