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Economic Policy and Journalism
Student sits at workstation and looks at laptop. © Aliona Kardash​/​TU Dortmund

Media as Financial Watchdogs

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Photo: Close-up of a computer monitor with visualization and diagrams of stock market movements. © Pixabay
A new study finds that high-quality, critical business journalism helps curb corporate manipulation and makes stock markets work better – evidence that a well-informed, independent press is essential not just for democracy, but for healthy economies.

Critical quality journalism improves the functioning of stock markets. This is the key finding of an empirical study conducted by researchers from the NEAR research network (Narrative Economics Alliance Ruhr), in which Henrik Müller, Professor for Economic Policy Journalism at the Institute of Journalism, is involved. “Our results are clear: attentive media push back against manipulation and fraud,” says Müller. A basic prerequisite for this is that journalists have specialist expertise; only then can they truly fulfill their role as “watchdogs.”

The study “Watchdog or Mouthpiece? The Role for Financial Media in Corporate Communication” was conducted under the leadership of Duisburg-based financial market researcher Martin Hibbeln from the Mercator School of Management. According to the study, uncritical journalism that merely focuses on repeating what top managers and professional communicators disseminate would have a harmful effect: media that see themselves primarily as a “mouthpiece” for companies reinforce the tendency toward whitewashing and manipulative corporate communication.

“Those who do not have to fear public exposure use the media to mislead the markets and the public as a whole,” says Müller. “Fortunately, our findings show that an active business press has the opposite effect. Companies that are covered thoroughly communicate more truthfully.” The study analysed newspaper articles, press releases, and transcripts of analyst calls (“earnings calls”) by executives whose companies are listed on the US S&P 500 stock index.

The results underscore how central competent journalism is not only to democracy but also to the functioning of the market economy, according to Müller. Without a free press, fraud, corruption, nepotism, and mismanagement spread. The international trend toward authoritarianism is therefore all the more worrying. “Independent journalism as a whole, and competent business journalism in particular, is systemically important. Anyone who acts against it jeopardises not only freedom but also prosperity,” says Müller.

 

Suggested citation:

Hibbeln, Martin Thomas and Metzler, Ralf and Müller, Henrik and Urban, Noah, Watchdog or Mouthpiece? The Role of Financial News Media in Corporate Communication (April 30, 2025). http://dx.doi.org/10.2139/ssrn.5241710

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