Financing dies in darkness? The impact of newspaper closures on public finance

By Pengjie Gao, Chang Lee, Dermot Murphy. Journal of Financial Economics, 2020

164 citations recorded by the source corpus.

We examine how local newspaper closures affect public finance outcomes for local governments. Following a newspaper closure, municipal borrowing costs increase by 5–11 basis points, costing the municipality an additional $650,000 per issue. This effect is causal and not driven by underlying economic conditions. The loss of government monitoring resulting from a closure is associated with higher government wages and deficits and increased likelihoods of costly advance refundings and negotiated sales. Overall, our results indicate that local newspapers hold their governments accountable, keeping municipal borrowing costs low and ultimately saving local taxpayers money.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/ab999abe94b9a838a05169a4cbcbbde3816694a8

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Citations in the corpus

• Newspaper Closures Polarize Voting Behavior (2018, background): “…weaker, people know less about their representatives and subnational governments and turn out at lower rates (Hayes and Lawless, 2015, 2018; Kübler & NEWSPAPER CLOSURES 3 Goodman, 2018; Shaker, 2014), and municipal governments spend less and borrow at higher rates (Gao et al., 2018; Yazaki, 2017).”