Newsprint, phonebook paper, and cardboard contain soy-based colored inks and oil- or petroleum-based black inks. The oil or petroleum inks may contain trace amounts of petroleum distillates and may have a long-term effect. They all (paper) make good bedding sources. There are some problems with composting as compared to straw or wood chips or sawdust.
For more information, consult the following resources:
* Effect of Phone Book Paper Versus Sawdust and Straw Bedding on Stall Air Quality Including the Presence of Airborne Gram-Negative Bacteria, Fungi, and Endotoxins. Equine Sciences Society. 1997. M.K. Tanner, A.M. Swinker, M.L. Beard, G.N. Cosma, J.L. Traub-Dargatz, and A.B. Martinez.
* Composting Characteristics of Three Bedding Materials. Equine Sciences Society. 1997. A.M. Swinker, M.K. Tanner, D.E. Johnson, and L. Benner.