Decline in biz news coverage undermines oversight of companies

A decline in business coverage has undermined oversight of public companies in places where newspapers have shut down and downsized, according to research from the University of Arkansas.

Kyle Massey of Arkansas Business writes, “The paper, soon to be published in the Review of Accounting Studies, also argues that an information void left by the newspaper losses has made the jobs of stock analysts and dutiful investors harder.

“Less local coverage of big companies leaves analysts and investors scrambling for information, and leaves corporations freer to issue forward-looking statements with reduced scrutiny. Financial forecasts and analysis have suffered.

“The authors started work on the paper about two-and-a-half years ago, seeking to understand how the decrease in local newspapers affects information available about local public companies.”

Read more here.