Chapter 1

Introduction

Journalism is expected to report the truth and to play a watchdog for the powerful. The powerful is now not only governments but also corporations. This is the time of globalisation and people are influenced by corporations through employment, their products and services, and the like. Besides, as the scandal of Enron shows, they sometimes commit the fraud which causes a huge loss among investors. Business/financial journalism always report about corporations, but to what extent is it successful to detect the truth? If it is difficult, why and what is the obstacle?

The aim of this paper is to examine the role of business/financial journalism in democratic society. What is the role and how business/financial journalists communicate with their news sources? Business/financial journalism usually deals with companies’ profitability, their strategies to expand their business, their new products and services, the movements of their stock prices and the like. Like other journalism which covers political issues or social problems, business/financial journalism has an influential power in society. Some citizens may choose the products based on the information through the media’s reports, and some may invest a company’s stock because of the newspaper’s articles on its profitability.

This research topic stems from my career as a business/financial journalist at the Nihon Keizai Shimbun, Inc. (Nikkei). For thirteen years, I have worked for this Japanese economic daily newspaper and I now cover about forty public companies in Japan. The news gathering process consists of calls from sources, mainly the public relations team of companies. Furthermore, leaked information such as business strategy plans, business restructuring, and financial situation provide news lead. The routine consists of having the interview with my sources, and write about a company’s stories. On the day of reporting the story, the company’s stock goes up and down sharply, making me wonder whether my stories have been triggering a company’s stock be bought or sold. The question is whether or not he has been manipulated by his news sources that have the intention to make their stock price move.

The hypothesis of this paper is that some of the business/financial journalists feel their role cynically, and realise it for just professional investors, bankers and other limited people. In addition, the others may feel their sources’ intention to manipulate the contents of reporting, and lose their way to understand their role in society. Almost all journalists may have their own self-regulation to tackle with the manipulation or other pressures.

It is possible to say that a company is the one of the most influential factors in society just like a politician. It affects the individual life through its products and services, so it is a powerful actor in society. A politician, another powerful actor in society, is examined by citizens through election, but how is a corporation checked and analysed by them? The business/financial journalism can play the role of watchdog to company’s wrong doings, and to provide citizens the information to judge the company.

Most major companies have a public relations (PR) department that communicates with journalists through press releases, briefings, and special events. Some companies use independent PR agencies as well. The PR people approach business/financial journalists to let them report the stories favourably and sometimes blocks from journalists’ investigation about the companies’ scandals or other negative reports. When the journalists are passive to obtain companies’ information and the PR people’s attempt to manipulate works well, the reports on companies will be just like “free advertisement”. PR can work as ‘manipulator’ for journalists. In that case, it is impossible to call the reports as journalism.　In other words, the reports will have a risk to create the companies’ good and positive images in public, even though the reality will be different.

The rise of PR makes it difficult for journalists to act independently. When journalists try to confirm a news lead about the company, the questions will be diverted to the PR section in the company. To obtain some information, journalists need to have their own network not relying on the PR only.

To compare with political journalism, business/financial issues have some jargons. For example, the financial market system and the related laws take time for journalists to understand these issues. This complexity will make journalists rely on the sources’ knowledge, and the reports will be possibly manipulated or at least shaped by the sources.

In addition, the Internet era allows many companies the creation of their own websites. It is possible for them to provide the information directly to the citizens in ways that suit them. The information on the websites is mainly what the companies want to appeal, and can be overloaded. To sort them out, the public relies on business/financial journalism to provide objective information.

To compare with political journalism, business/financial journalism is not frequently discussed in the academic arena. One of the reasons may be the accessibility for the scholars to the people concerned. The process of news production is not open but private, and the people in journalism and companies’ PR team hesitate to talk about it. It is actually difficult to initiate communication between journalists and PR people or news sources on business/financial issues directly.

In this paper, the first section is literature review. At the beginning the characteristics of the corporations are discussed. Corporations sometimes do not care the governmental rules for pursuing their own profit. The role of public relations is also argued. Next, the role of journalism is discussed. It includes the characteristics of business/financial journalism. In addition, Herman and Chomsky’s propaganda model is examined. This model can be referred to analyse in the findings.

As back ground information, the actual business incidents are argued such as Enron and the insider dealing incidents in The Mirror and Nikkei. In addition, the Press Complaints Commission’s Code of Practice is discussed as an example of self-regulation.

This research conducts the interviews with the actual business/financial journalists and corporate public relations people. The section of Findings is based on these interviews.