1. How does the Media cover
Business and Economics?
A IN-DEPTH ANALYSIS
BY RAMY SIMPSON

2. Lesson Modules
 Module 1: The media’s effect on the stock market and
how the media covers the stock market.
 Module 2: How does the media affect the public
perception of the economy?
 Module 3: Business Journals

3. Lesson Module One
THE MEDIA’S EFFECT ON THE STOCK
MARKET AND HOW THE MEDIA COVERS THE
STOCK MARKET

4. Learning Objectives
 The correlation between media stories and stock
market reactions.
 How media outlets choose which business stories to
cover.
 What makes local media important?
 The importance, relevance and geographic proximity
of news in relation to local media.

5. The correlation between media stories and stock
market reactions
 With or without media attention, when firm
fundamentals change, investors respond.
 The media just makes knowledgeable facts known to
a broader audience.

6. Example of Earnings Per Share
Media’s
Influence
Third Quarter
In 2007 Detroit News
ran an article about how
local firm DTE Energy
had third quarter gains
that surpassed their
previous years revenue
and were now worth Fourth Quarter Earnings Per
$1.16 per share. In the
fourth quarter DTE had Share
more gains and were
worth $1.56 per
share, Detroit News did
not report these gains. As
it turned out, overall Previous Year
trading was 21% higher
the first three days after
the third quarter then the
fourth quarter, even
though the fourth quarter 0 1 2
gains were higher.

7. The correlation between media stories and stock
market reactions
- Another Example of Media’s Influence:
 Studies have shown if local media reports a company’s
earnings on a specific day, local trading increases on that
specific day.
 If a local media outlet in Phoenix reports on a companies
earnings or losses on a Wednesday, an increased amount
of trading in Phoenix will occur on that Wednesday. If
Seattle reports the same news a day later on Thursday, an
increased amount of trading in Seattle will occur on that
Thursday.

8. The correlation between media stories and stock
market reactions
 A reason why news might get to a city a day later is
poor weather. In today’s internet era, news will find
ways to arrive in every city at the same time.
However in the pre-internet era, specifically the
90’s, news came from local papers, and if weather
prevented newspapers from getting door to
door, news would be delayed for many people.

9. How media outlets choose which
business stories to cover
FACTORS:
LOCAL MEDIA
IMPORTANCE
RELEVANCE
GEOGRAPHIC PROXIMITY

10. How media outlets choose which business stories
to cover
 Obviously if a report on a business deserves National
attention, it will be a top priority for all media
outlets. It is both important and relevant to people
across the nation. Media outlets will cover these
stories, such as scandals, the same way. They will
explain what happened and provide their own biases.
 However what really differentiates media outlets
across the country is how they cover business news
that isn’t worth National attention. How do they
decide what business news to report on?

11. How media outlets choose which business stories
to cover
 What seems to be apparent from studies is that the
media in a town is more likely to report business
news relevant to that town. Geographic proximity is
important when it comes to news.
 For example, the Atlanta Journal Constitution is
more likely to report updates from a business in
Atlanta than the Pittsburg Post Gazette is.

12. How media outlets choose which business stories
to cover
 This has an effect on local trading on the Stock
Market.
 Local media coverage increases local trading by an
estimated 75% in the typical market.

13. Quiz
What kind of effect do you think the Media has on
daily trading?
 No effect
 Minimal effect
 Decent effect
 Huge effect

14. Lesson Module 2
HOW DOES THE MEDIA AFFECT THE PUBLIC
PERCEPTION OF THE ECONOMY?

15. Learning Objectives
 How closely related are public evaluations of the
economy to the news coverage of the economy?
 How does the way the media covers the economy
reflect real economic conditions?
 Does the media follow both positive and negative
economic conditions evenly?
 Why does the media cover the economy in the biased
way it does?

16. How closely related are public evaluations of the
economy to the news coverage of the economy?
 Citizens are more concerned with the economic
future rather than the economic past.
 Even though the information is widely
available, many citizens don’t know much at all
about true economic conditions. Their ability to
analyze economic information given to them is
questionable.
 This makes citizens extremely impressionable when
the media talks about the economy.

17. How closely related are public evaluations of the
economy to the news coverage of the economy?
 "Without trying, the public is exposed to the best
information about the economic future that exists.
Merely by noting that most forecasters say good
(bad) times are ahead, the public becomes subject to
the causal influence of the professionals' more
esoteric tools."

18. How does the way the media covers the economy
reflect real economic conditions?
 Research shows that the media tends to emphasize
negative economic news.
 This makes the public pessimistic about future
economic conditions.
 Republicans claim that this hurt the Bush reelection
campaign.

19. Does the media follow both positive and negative
economic conditions evenly?
 The media does not completely leave out positive
economic news, it is included a lot of the time.
 Robert Goidel and his team collected 95 articles and
analyzed them. His team concluded that media
coverage of the economy does reflect real economic
conditions to a certain point.
 A huge difference is that negative changes in the
economy are emphasized a lot more than positive
changes in the economy.

20. Does the media follow both positive and negative
economic conditions evenly?
 This emphasis of negative changes in the economy
makes the public more pessimistic about their
futures.

21. Why does the media cover the economy in the
biased way it does?
 It appears that during the 1992 election, the media
overemphasized the negative news about the
economy.
 The Bush administration repeatedly claimed that the
media was focusing a lot more on the negative
aspects and not the positive aspects.

22. Why does the media cover the economy in the
biased way it does?
 Is this true?
 Well according to the research done by Goidel and
his team, it appears Bush received 30 more negative
news articles then he would have if the articles were
written based solely on economic conditions.
 Why is this?
 It is not clear, maybe possible liberal bias.

23. Lesson Module 3: Business Journals
 Learning objectives:
 What differentiates “The Wall Street Journal” and
“Financial Times”.

24. • The Wall Street Journal
is an international daily
newspaper published in
New York City.
• The largest newspaper
in the United States with
2.1 million copies in
circulation.
• Mainly covers
American International
Business, economics, an
d financial news.
• Has won the Pulitzer
Prize, a prestigious
award for
newspapers, 33 times. The Wall Street Journal

25. The Wall Street Journal Economic Views
 A recent study done by Tim Groseclose and Jeff
Milyo compared 20 Journals, and showed that the
Wall Street Journal had liberal economic and
political views.
 The Journal emphasizes free markets and blames the
United States budget deficit on a lack of foreign
growth.
 The journal is a huge supporter of supply-side
economics and believes in a fixed exchange rate over
a floating exchange rate.

26. Wall Street  1) Lowering the income tax so
Journal more goods can be produced.
Glossary
 2) When a Government sets an
1) Supply-side
Economics. official exchange rate that will be
maintained between different
2) Fixed Exchange Rate
currencies. For example, if a Euro
is set as worth $2, central banks
3) Floating Exchange
will have to have enough money
Rate in reserve to account for that.
 3) A constantly changing
exchange rate based on how
valued a currency is.

27. • Published in London
and has 2 million Daily
readers.
•
•Huge Rival of Wall
Street Journal.
•Provides full daily news
on World Markets.
Financial Times

28. The “Financial Times” Economic Views
 Advocates free markets, just like its “The Wall Street
Journal” rivals. It is also a big supporter of
globalization.
 Supports the idea of the government controlling the
amount of money in circulation.
 Pro-European Union.
 Tends to be liberal with its economic views.
 Accused by the Wall Street Journal of
overemphasizing its Keynesian views.

29. Financial 1) Competitive market where prices
Times are determined at the equilibrium
Glossary value of supply and demand.
• 1) Free Markets
2) The distribution of goods
nationally through decreasing
•2) Globalization
import taxes and tariffs, which
increases international trade.
•3) Keynesian Views
3) The government should increase
spending and/or decrease taxes to
boost demand during a recession.

30. Similarities between “The Wall Street Journal”
and the “financial Times
 Extremely similar in their economic views.
 Both advocate for free markets and have mainly
liberal views.
 Both believe best way to fight a recession in the very
least is to lower taxes.

31. Differences between “The Wall Street Journal”
and the “financial Times
 Not to many differences, but some noticeable slight
differences.
 Wall Street Journal believes producing goods more
domestically is the best way to maintain a good
economy.
 Financial Times believes best way to maintain a good
economy is increased globalization.