“The current crisis in global banking, markets and economies has reminded us all of the importance of financial and business journalism. It has also raised a set of profound questions as to the quality of that form of reporting. Why didn’t we know this was coming? Did the journalists fail to put the financial system under proper scrutiny? Are they equipped to deal with the continuing complex story? Is this representative of a wider problem with the news media?”—From “What Is Financial Journalism For?” a study published in November by POLIS, a joint public policy research project of the London School of Economics and the London College of Communication.

Those are good questions. The financial press doesn’t get much study from academic types, but if it ever was going to, now would be the time.

Two years ago, Damian Tambini, a senior lecturer on media and communications at the LSE, launched a project to examine financial journalism’s role in the wake of new challenges: technological changes, increasing complexity of the subjects it covers, a British media/insider-trading scandal, eroding media finances, and the rising clout of financial public-relations operations.

Then the financial crisis hit, making a systematic study of the financial media, if anything, more urgent than ever. The result is a useful 33-page paper that looks at the financial media’s place in the financial system and calls, at least implicitly, for higher standards.

The title of the paper asks one of those big, “dumb” questions that I find so valuable:

What Is Financial Journalism For?

Those kinds of questions don’t get asked much on this side of the pond. That’s too bad. Even the subject of business media’s performance in advance of the current crisis seems to be something of a taboo. The scant attention the subject has received has been either the once-over-lightly treatment, a la Howard Kurtz (1), and or an “all-clear” for the business press from our cousins over at the American Journalism Review.

We take a different view here on the press’s pre-crash performance and have done so on many occasions, and believe, like Polis, that some reexamination of the business press’s role and priorities is in order.

We note also that 68 percent of top business journalists recently surveyed agree with us that the financial press, to use a sports metaphor, didn’t leave it all on the field in the run-up to the crisis.

We’ll have a lot more on the subject coming up this spring. Stay tuned.

I recommend the Tambini paper as a starting point for discussion, not (solely!) because I was one of the interviewees, but because among its merits it sees financial journalism as not separate from, but as part of, a system designed to oversee financial markets and corporate actors. The tone is dry, sober and serious—entirely unAudit-like, and all the better for that.

“It is time for a much more serious analysis of the effects of new market systems, of new media and the state of financial journalism,” writes Charlie Beckett, Polis’s director, who wrote the preface.

The paper is written for the British context, so at first glance a lot of it may sound a bit off-key to American ears. It argues for instance, for reexamining financial journalists’ “rights” and “duties,” for strict definitions of who’s a journalist and who’s not, and for creating or refining codes to regulate journalist conduct. All this may sound very Euro—more formal, regulation-oriented, and even more organized than we’re used to. It might sound indeed a bit fussy and, yes, academic to define journalists’ dos and don’ts regarding panics, bubbles, market rumors, and the like. And one would think it should go without saying that business journalists shouldn’t trade in the stocks they’re reporting about.

But I wouldn’t dismiss these issues so fast. Even beyond the rare conflict-of-interest cases we’ve encountered among media practitioners (e.g. Maria Bartiromo CNBC’s on-air disclosure before a 2003 interview with a Citigroup executive that she owned $45,000 in Citigroup shares) we now have money managers routinely offering widely read, often highly literate, commentary on financial issues in which they may or may not have a stake, which they may or may not disclose. I’m thinking here of a recent, well-done Op-Ed by journalist Michael Lewis and hedge-fund manager and author David Einhorn, but it could apply to many other commentators as well. That poses a more complex set of issues, and some believe, problems.

And it’s worth remembering that this crisis has brought a fresh set of allegations that an overly aggressive business press can do actual harm. Vanity Fair’s Bryan Burrough made an interesting, if not entirely convincing, case last year that CNBC (again, on the cutting edge of ethical issues) played a hand in the collapse of Bear Stearns. I’ve heard word of similar allegations (or are those compliments?) leveled against The Wall Street Journal for its coverage of both Bear and Lehman Brothers.

So, is some systematic discussion about the financial media’s role and performance in order? Absolutely.

Some of us hold that, far from being too aggressive, the business press hasn’t been nearly aggressive enough, particularly in reporting on the fundamental problems, I would say crookedness, that overran the financial-services industry and its Wall Street partners.

The most valuable section of the Tambini paper, I think, is a discussion of the importance of the role of self-definition for news organizations and reporters. What journalists think
their own roles are is a little-understood, but critical determinant what ultimately appears in print. Do they think they’re out to save the world—or the Dow? Do they serve readers as citizens? Investors? What?

Tambini interviewed journalists, executives, publicists, policy types, and others and found:

Some specialist business and financial journalists see their role entirely in terms of provision of information to investors, and their primary responsibility in terms of helping them make successful investment decisions. Some have a very developed sense of how they should serve investors, keeping a mental tally of successful calls and tips, and their implications for investors’ bottom line. Others are much less socialised into a general journalistic view of the world, seeing business journalism as a branch of journalism with the same orientation to the broader public interest as a whole. If a business journalist deals with a story on the ethical practices abroad of a company – a story on child labour or collusion with non-democratic authorities, for example – should the business reporter base news values on whether this is likely to impact the bottom line or on a more general journalistic notion of the public interest? Ultimately, do journalists have a broader professional duty to ensure that corporate malpractice comes to light, or is their role merely to provide whatever their readers want? And are those readers basically to be addressed as real or potential investors or as citizens with a variety of views? All outlets will develop their own ideologically tinged approaches to these fundamental questions. And whilst these abstract questions will rarely be explicitly discussed on news desks, the de-facto orientation of any journalist to these fundamental responsibilities will impact every aspect of her professional practice, in terms of what stories are sought, what news values are accorded to them, and how they are presented.

The report found little agreement on the title question: What is financial journalism for?

In summary, there is some general agreement on a basic tier of responsibilities that most financial and business journalists agree to: to respect the codes of conduct and the law, and to respect any particular guidelines that apply to the particular outlet in which they work. But the more positive responsibilities are much more disputed. Some reject the notion of any profession-wide template of responsible behaviour entirely, arguing that each media company, in providing news services, simply serves customers and responds to their demands. Others have a more developed notion of the role of financial journalism in the system of corporate governance: according financial and business journalism a ‘fourth estate’ role in relation to corporate power: holding both businesses and public authorities to account and investigating malpractice.

Or as the paper puts it elsewhere:

If journalists see themselves mainly or merely as serving the market or investors, they may be less effective in their watchdog role.

I agree. I would go further and argue that journalists who (consciously or not) see their role as serving investors first, or primarily, risk failing readers as both as citizens and investors. The current crisis illustrates perfectly that insistent, drumbeat, muckraking reporting (“holding both business and public authorities to account and investigating malpractice,” as the paper says) about systemic abuses in the lending industry, for one, would have provided the vital, longer-term warnings that investors clearly lacked. We’ve discussed this form of press myopia in relation to differing approaches by the mainstream media and the alternative press to coverage of Citigroup.

In any case, it is valuable that Polis has taken on the task of discussing such fundamental questions systematically and in the abstract, above the fray of daily journalism and the blogs, where such matters can be, shall we say, personalized, and finger-pointing is, um, not uncommon.

The paper deals with other challenges to effective reporting, some touched on elsewhere, including the problems to journalism posed by financial complexity, the speeding up of the news cycle, and, interestingly, globalization.

And I haven’t seen much discussion about the rising clout of public-relations pros in the dissemination of business news.

One Business Editor with a long experience in the UK saw the rise of financial PR as the single most important change to have taken place in recent years:

“In the last ten, twenty years I suppose the biggest change has been the rise of the financial intermediary, financial public relations services. They are putting up barriers to information. I think they were always around but they’ve developed and become much more sophisticated. When I first came across them they were really kind of press cutting services. But now they are really strategy advisors. And there are some company directors that do not talk or answer phone calls without consulting them. And they have enormous power. In many ways, they set the agenda. They are the access point. They are making these people available for interviews or they don’t make them available for interviews. They release information in a, what’s the word, in a way which is carefully orchestrated to happen. […] Things are very controlled in a way compared with the way it used to be.

And here’s an interesting fact: Financial PR revenue in Britain increased nearly seven-fold from the ’80s to the ’90s:

Financial PR has been a high margin, rapid growth industry in recent decades. In 1986, British companies spent £37m on financial PR. A decade later the annual figure had risen to £250m. (Michie, 1998: 26). The evidence is that the past decade has seen similar or perhaps larger rates of growth. Industry sources estimate that financial PR consultancies can command fees up to 1 percent of the bid values in M+A deals (Miller, et al. 2000).

Wow. What do you think it did in the U.S. in, say, the last ten years? It’s a big number, I’m sure.

In the end, I like the Tambini paper because it does business journalism the honor of taking it seriously. That’s both good and bad news for the field, since that particular honor also brings scrutiny.

The paper is part of an attempt to pave the way for a much broader project on the financial media, its roles and responsibilities. Here’s hoping it succeeds.

1. Press May Own a Share in Financial Mess,
< i>The Washington Post
6 October 2008

p.s. For anyone reading this in London, Tambini is presenting his paper next Monday and will be hosting a conference in February: “Why did nobody see it coming? Reporting the Global Crash of ‘08.”

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Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.