Taxpayers lose in the bond market when local newspapers close

Finance professor Paul Gao‘s research on the relationship between local newspaper closures and the cost of municipal bonds was featured in Bloomberg Businessweek. Read the full story here. 

A study by economists from the University of Notre Dame and the University of Illinois at Chicago found that investors demand higher yields to buy the bonds of governments in metropolitan areas where newspapers have shut down. They argue that’s likely because reducing the number of reporters rooting out mismanagement and corruption allows governments to run less efficiently, which is reflected in bond-market prices.