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Local newspaper closures and non-GAAP reporting quality

Author

Listed:
  • Huang, Wei
  • Liu, Junjun
  • Zhang, Rui-Zhong (R.Z.)

Abstract

This study examines the impact of local newspapers on the quality of firms’ non-GAAP reporting, a common form of voluntary disclosure. Local newspapers act as effective gatekeepers for local activities and provide valuable information to the public. Using the closure of local newspapers as a plausibly exogenous shock to newspaper coverage, we observe a decrease in firms’ non-GAAP reporting quality following such closures. This suggests that local media coverage is an effective external governance mechanism for firms’ voluntary disclosures. The effect is more pronounced for firms with low-quality ex-ante information environments. Our results remain robust to falsification tests using pseudo-event dates or alternative research designs. This study underscores the importance of supporting the sustainability of local media.

Suggested Citation

  • Huang, Wei & Liu, Junjun & Zhang, Rui-Zhong (R.Z.), 2024. "Local newspaper closures and non-GAAP reporting quality," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324000540
    DOI: 10.1016/j.frl.2024.105024
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    More about this item

    Keywords

    Local newspaper closure; Media; Corporate governance; Non-GAAP disclosure;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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