A new study by the LSE media think-tank Polis claims that financial journalism needs a total overhaul to meet the demands of reporting modern markets and financial systems.
It says that financial journalists find it difficult to cope with the responsibility of predicting and analysing both regular financial news as well as the current global market meltdown.
The report called "What is financial journalism for? Ethics and responsibility in a time of crisis and change" by Dr Damian Tambini, looks at the wider context of financial journalism as well as reporting of the current economic crisis.
It looks at the role of key individuals such as the BBC's Robert Peston as well as the different financial news media sectors.
It identifies four key problems:
1 The speed of financial news
2 The complexity of issues
3 The increased power of PR strategy
4 The limited resources of time and skill
The report says: 'Financial journalism faces a number of challenges currently; including pressure of speed due to 24hour news cycle; increasing complexity; PR strategies; sustainability; and the challenges of globalisation. Journalists have begun to respond, but the profession lacks a clear sense of purpose'
On the current crisis the report says: 'Whilst the root causes of the crisis appear to lie in the behaviour and regulation of banks and other investors, many have asked what role financial reporting may have played in the crisis, and whether the crisis would have been so sudden and deep if a different approach to the practice of financial journalism had been taken.'
The report calls for a new compact between financial journalism and the public:
'Those that seek a more responsible financial journalism should open a dialogue about how best to support that, through promoting access to key financial information for journalists, clarifying source protection standards and defamation risk. Given the business constraints financial journalists face, they will not be able to develop a new role in the global corporate governance structure without a re-assessment of the privileges that society affords them
'There is a widespread sense that the traditional challenges of being a financial journalist; of not being used by your sources, of maintaining adequate scepticism, of being first without being wrong, are being redefined in the context of new technological, legal and commercial challenge'
Report author Dr Damian Tambini called on the financial media to review how it works: 'Financial journalists should reassess their roles and responsibilities and seek a new regulatory settlement. Those that want more from business and financial journalism should open a dialogue about how best to support that, through promoting access to key financial information to journalists, and clarifying source protection standards and defamation risk. Given the business constraints financial journalists face, they will not be able to develop a new role in the global corporate governance structure without help, and that means we urgently need to review the constraints they face in doing their important work.'
Polis Director Charlie Beckett said: 'All journalism is subject to groupthink. It could be argued that the financial markets themselves are prey to this. Indeed, that there are incentives for financiers that positively promote a herd mentality. The accusation against financial journalism is that it simply follows those crowds.
We think that there is a valid case to be made that, as societies, we have neglected the value of critical financial journalism. We believe that the time is right for a new compact between financial journalism and society. 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. This report is the start of that process.'
The report was based on a year's research including interviews with financial journalists, experts, bankers and regulators. It is the initial paper in a major programme of work by the LSE's media think-tank Polis.
It will be launched at an open research seminar with Gillian Tett (Financial Times), Ed Wasserman (Washington University), Anne Pettifor and Paul Lashmar at 9am, Monday November 17th at the LSE.
Contact Polis@lse.ac.uk to attend the seminar launch and for more details of the report which can be found in full at http://www.polismedia.org/workingpapers.aspx
For more information contact:
Polis Director Charlie Beckett on: 0780 878 6573
14 November 2008