Heese, Perez Cavazos, and Peter on When the Local Newspaper Leaves Town: The Effects of Local Newspaper Closures on Corporate Misconduct @HarvardHBS @CDPeter84 @RSMErasmus @UCSanDiego

Jonas Heese, Harvard University Business School, Gerardo Perez Cavazos, University of California, San Diego, and Caspar David Peter, Erasmus University Rotterdam, Rotterdam School of Management, are publishing When the Local Newspaper Leaves Town: The Effects of Local Newspaper Closures on Corporate Misconduct in the Journal of Financial Economics. Here is the 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.

Download the article from SSRN at the link.