Are Newspaper Deserts an Oasis for Leniency? The Effect of Information Dissemination on Regulator Activity

51 Pages Posted: 17 Nov 2021 Last revised: 3 Oct 2022

See all articles by Sinja Leonelli

Sinja Leonelli

University of Chicago - Booth School of Business

Date Written: November 1, 2021

Abstract

In this paper, I show that regulators react to a decrease in local information dissemination by decreasing their activity. Specifically, I find that a local newspaper closure decreases the inspection rate in a given county-industry by 8%, compared to the same industry in a neighboring county. I also find that regulators react on the intensive margin by decreasing the extent of inspections and that the effect is stronger when regulators have more discretion over the enforcement activity. A decrease in information dissemination decreases the deterrence effects of inspections, and thus the effectiveness of the regulator's activity. I show that regulators take the effectiveness of their activity into account and react more strongly when newspaper closures have a larger effect on deterrence and are more salient. In addition, I do not find strong evidence for the regulator's response being driven by a change in reputational concerns. Overall, I find robust evidence that regulators decrease their activity after a decrease in information dissemination. My results show that information dissemination can be an integral part of regulators' enforcement choices due to the inherent deterrence effects.

Keywords: Misconduct, enforcement, regulator effectiveness, deterrence, compliance, information dissemination, media, OSHA, regulation

JEL Classification: G18, J28, J81, K32, L51, M48

Suggested Citation

Leonelli, Sinja, Are Newspaper Deserts an Oasis for Leniency? The Effect of Information Dissemination on Regulator Activity (November 1, 2021). Available at SSRN: https://ssrn.com/abstract=3953866 or http://dx.doi.org/10.2139/ssrn.3953866

Sinja Leonelli (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S Woodlawn Ave
Chicago, IL 60637
United States

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