The Economics of Sensationalism: The Lack of Effect of Scandal-Reporting on Business Outcomes

It goes nearly unchallenged that ambition for increased demand and therefore commercial forces induce newspapers to engage in sensationalism. However, who actually benefits, and to what extent, by reporting on alleged scandals remains largely unclear. Accordingly, this study evaluates the business outcomes of the most spectacular German scandal in recent decades. The results provide an explanation for an intentional lack of high-quality journalism; whereas news corporations, as well as advertisers, come away empty-handed, sensationalism seems to be incited by self-seeking journalists.