Feb 14, 2009

Excessive reporting and results of hypercompetition

A very interesting analysis of what is happening with our stock markets by Sunil Jain of Business Standard. The Educomp issue burning these days is analyzed in Guilty till proven innocent

While the discussion has a fascinating take on the stock movement and volumes that surrounded the timing of news, I was more fascinated by the discussion on the issues surrounding media's role.

Mr. Jain raises an interesting moral question - is media ok in speculating on a company (or an individual) such that it blemishes the image, reputation and credibility of the company? And to what end?

The point is, just like a few companies' irresponsible behaviour gives rise to compliance laws that all have to follow that in turn increase the costs for everyone and leave everyone worse off - irresponsible media reporting also leaves everyone worse off.

If a channel or news misrepresents some data, then the victim of reporting loses credibility. The channel/newspaper may gain TRP or additional readership but it also loses credibility in long run.

Who loses? the company, the media company (though they never realize anything of this sort), and most importantly the customer!

Who gains? There are speculators in the market who gain on the movements.

Conclusion - I am dreaming about the utopian setting of all people being truthful about everything.
Time to wake up!

DISCLAIMER - I am not making any judgment on the report or the company in focus. The above post is more about the effects of such events.

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