The Financial Press and the Investing Public

For centuries, Britain has had a financial media landscape unrivalled in Europe with newspapers like the Financial Times or The Economist traditionally keeping business professionals up to date about market developments. But by the early twentieth century, punters could get the latest prices and market-moving stories from tabloids like the Daily Express and the Daily Mail. By 1960, even the working-class Daily Mirror had a designated City page—right next to the racing coverage—and gave investment advice to people of modest means. This chapter takes a fresh look at the financial press as the main source of information for private investors of different social backgrounds. When seeking to explain why economic liberalism became fashionable again in Britain during the 1970s, we must consider that for more than two decades, millions of newspaper readers had been increasingly exposed to the asserted benefits of free-market capitalism and were actively encouraged to take part in the market. Recent studies on the history of neoliberalism state that financial journalism became an important amplifier for the Thatcherite language of profits in the 1980s. This chapter argues that this misses the point and shows instead how Britain’s financial press was not an echo chamber of Westminster politics—it set the tone of the wider share ownership agenda. The newspaper columns of the Financial Times and the Daily Telegraph or the market populism of The Express, The Mail, and The Mirror played a crucial part in shifting British public opinion in favour of free-market capitalism.

Soft Information in the Financial Press and Analyst Revisions

Both sell-side analysts and the media are information intermediaries in capital markets. This study investigates the association between sell-side analyst research and information in firm-specific news coverage. More frequent recent news coverage is associated with stronger market reactions to analysts' research revisions, and primarily explained by soft information in news coverage. The primary result is robust to using both an instrumental variable and a quasi-natural experimental setting to generate exogenous variation in media coverage, alleviating concerns about endogeneity. In addition, using textual analysis, we document that explicit media references in analyst research reports are significantly associated with more frequent analyst revisions and stronger market reactions to revisions. Our study provides empirical evidence of analysts' assimilation of information from the financial press and their role in the efficiency of capital markets.

The Crumble in the Jungle: The London Financial Press and the Boom-and-Bust Cycles of the Ashanti Goldfields Corporation, 1895–1914

In this article, we study the role that media plays during a speculative bubble on an emerging market, and in particular the London financial press’s relation to the West African mining bubble of the early twentieth century. The focus is on the leading company in this sector at the time, Ashanti Goldfields Corporation. The London financial press lacked access to independent, reliable information on the ground, so it often failed to provide readers with relevant factual information. In some instances, the press might have even fueled the speculative cycles through the reporting it provided.

The Financial Press

This chapter discusses how national newspapers have reported on business and the economy, particularly during economic crises and its relation to the Treasury orthodoxy. It focuses on the dramatic expansion of financial reporting in the latter part of the 20th Century to move beyond the City beat to encompass personal finance, the economy and labour reporting. The scale and scope of financial reporting has always been closely tied to Britain’s economic position, with coverage shrinking in the interwar years as Britain lost its international dominance and expanding in the era of globalisation when deregulation of the City revived London as an international financial centre. This boosted the profitability and circulation of the leading financial publications, The Economist and the Financial Times, which also gained a large global audience. The nature of financial reporting also changed with the rise of financial PR firms which sought to influence the coverage of companies, especially during take-overs.

The impact of market drops is different for investors before and after retirement

As applied to investing for and during retirement, the popular financial press has promulgated two memes about the impact of market drops: (1) for those investing for retirement market drops aren’t problematic; and (2) for those in retirement market drops are. We use simulation to illustrate the logic behind these memes, to demonstrate that they are mostly but not entirely true, and finally to restate them more precisely. Although sequence of returns risk is not present during the accumulation phase as an investor plans for retirement, it can have a significant (and perhaps underestimated) impact during retirement. This, however, can place the retiree in a predicament – namely, settle for lower returns and lower distributions during retirement or gamble on stocks. However, it does not necessarily imply that retirees must abandon the expected returns associated with stocks, because of the ability to write deep-in-the-money covered call options, which harvest the expected market return (but no more than this) with limited variability.

Financial Journalism

On a fundamental level, financial journalism provides information to individuals that helps them make informed economic choices, and understand how those choices impact their financial situation within the context of the broader political economy. The need for reliable information about prevailing business conditions has been recognized since the dawn of commerce, and since then financial journalism and commerce have developed together in a mostly symbiotic, albeit occasionally combative, relationship for hundreds of years. In its earliest iterations, in the 16th century, financial journalism consisted of little more than the publication of prices of commodities or other goods for sale. As trade and commerce expanded over the following centuries, so did the role and content of financial journalism. The globalization of commerce and increasing integration of the world economy since the late 20th century has increased the importance of financial journalism, while the spread of mass-market investment opportunities and defined-benefit retirement accounts in many countries has expanded the pool of individuals exposed to moves in financial markets, helping to make financial publications among the world’s most-read newspapers and websites. The focus of financial journalism is quite consistent no matter what country or language it is published in: broadly defined, financial journalism encompasses news about financial markets, macroeconomic data and trends, government economic policy, corporate news (especially earnings announcements), personal finance, and commentary about all of the above. However, the often mutualistic relationship between financial journalism and the organizations it covers has led to conflicts of interest, and to a debate over the proper role of a financial press: whether it is to merely disseminate data and information from those organizations, or to serve as a watchdog over them. For example, the bubble in internet-related shares in the 1990s was blamed partly on “boosterism” by the financial media, while many investors also blamed the financial press for failing to sound the alarm ahead of the Global Financial Crisis later in the following decade.

What Form of Visibility Affects Earnings Management? Evidence from Italian Family and Non-Family Firms

This paper addresses the issue of financial communication quality by studying the determinants of earnings management practices in family and non-family businesses. Previous literature has highlighted the effect of a company’s size, as a form of visibility, on earnings management practices. This study focuses on the analysis of the relationship between different forms of visibility—exposure to financial press, proximity to the consumer, size of assets, sales and firm age—and earnings quality. The results show that the forms of visibility taken into consideration have a different effect on earnings management practices. Furthermore, they show that family businesses are less likely to resort to these unethical practices, especially in the presence of financial press exposure and proximity of the business to the consumer.