When the local newspaper leaves town: The effects of local newspaper closures on corporate misconduct

Jonas Heese, Gerardo Pérez-Cavazos*, Caspar David Peter

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

1 Citation (Scopus)

Abstract

We examine whether the local press is an effective monitor of corporate misconduct. Specifically, we study the effects of local newspaper closures on violations by local facilities of publicly listed firms. After a local newspaper closure, local facilities increase violations by 1.1% and penalties by 15.2%, indicating that the closures reduce firm monitoring by the press. This effect is not driven by the underlying economic conditions, the underlying local fraud environment, or the underlying firm conditions. Taken together, our findings indicate that local newspapers are an important monitor of firms’ misconduct.

Original languageEnglish
Number of pages19
JournalJournal of Financial Economics
DOIs
Publication statusPublished - 25 Aug 2021

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