Do Local Newspaper Closures Affect Bank Opacity?

Abstract

This study examines how the media affects banks’ financial reporting opacity. Using local newspaper shutdowns as an exogenous shock, I find that banks headquartered in counties with newspaper shutdowns have greater abnormal loan loss provisions following closures, suggesting increased financial reporting opacity. This effect is more pronounced in states with fewer alternative local information sources. This effect is also more pronounced among banks with lower analyst following, weaker debtholder monitoring, higher risk-taking, and more localized operations. Further analysis suggests that the affected banks are less likely to receive enforcement actions after newspaper closures. These results indicate that local newspapers play an important role in monitoring banks and disseminating bank information.

Date of Award	3 May 2023
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Liu ZHENG (Supervisor) & Yangxin YU (Co-supervisor)