Bloomberg Opinion columnist Noah Smith wrote a piece about finance professor Paul Gao's paper detailing what happens to government borrowing costs when a city's newspaper closes. Gao is the Viola D. Hank Associate Professor of Finance in Notre Dame's Mendoza College of Business. Read the full article here.
More specifically, in counties where a newspaper closes shop borrowing costs rise more than in neighboring counties. Also, the increase in borrowing costs tends to happen when the last newspaper leaves, but not when only one of many local newspapers closes -- indicating that it’s the loss of newspapers’ monitoring function, not economic decline, that causes the effect.