Media in the market
Only a few days ago, we had remarked in these columns that share prices, like beauty, are in the eyes of the beholder. From political and financial climates to liquidity and industry conditions, from company performance and financials to global trends and policies, a wide range of factors influence stock prices. It is natural, therefore, for debates to rage on share prices in the market. The words of the retiring chairman of the Securities and Exchange Board of India (Sebi), M. Damodaran, questioning the role of television anchors in influencing stock prices, needs to be seen in this context.
Mr Damodaran rightly asks mediapersons to consider whether they are influencing prices and if somebody stands to gain from their public stand. Mercifully, he has discounted the notion of media persons ‘playing the market’ for personal gain. The fact is that all professions — be it politics, civil service or the media — involve ethical conduct as well as legal requirements. While Mr Damodaran’s concerns are genuine, he has to recognise the fact that the media have a right to influence market behaviour through their opinions. With the coming of financial television, the wall between news and opinion has admittedly been blurred. Responsible channels often issue disclaimers that place the onus of risk on the viewers and enforce a code of ethics for their staff. As long as these are in place, Sebi should have no reason to complain. If an editorial column in a newspaper can influence voter behaviour during elections in a democracy, it logically follows that in a free market, a media comment on the price of a share should enjoy the same proportion of freedom.
As Mr. Damodaran himself argues, the Indian investor has matured and will not buy anything at any price. While he may pat himself on the back for the efforts Sebi has undertaken to educate investors, he may also like to extend the pat to media persons who inform investors — not just on facts concerned, but on the context of the facts. If such contextualisation sometimes extends to opinionising, it is well within the accepted practice of a free media. And, if the Indian investor has matured in dealing with company promoters, we may add that he or she may have attained comparable maturity in dealing with media comments as well.
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