In Pursuit of Profit
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While few businesspeople doubt the existence of fake news in the financial arena, many believe it to be uncommon or limited in scope. They assume that the hard data typically referenced in financial news precludes it from being faked, and that any inaccurate news will be weeded out by major news sources to prevent it from gaining traction.
Even among savvy business owners and executive leadership, there is the perception that fake financial news only affects the stock prices of publicly traded companies. As a result, the effect of fake news on smaller privately held businesses is largely overlooked.
Fake financial news does exist and does affect private businesses.
Students at Columbia and Yale have begun studying how fake news affects financial markets and have concluded that smaller businesses are more heavily affected than their larger counterparts. While fake financial news has yet to be studied in the same capacity, its effects are likely magnified for small businesses.
Anton Gordon, a software developer writing algorithms to determine web content reliability explains,
“Fake news in the financial market has been a problem for a long time, we just didn’t call it fake news. For investors, it's information not based on conversation with management or ideas coming from a financial news blog that allows people to post whatever they want.”
As a result, business owners and entrepreneurs must constantly be on the lookout for fake financial news to ensure that strategic decision making is not influenced by speculative, deceptive, or unfounded financial news.
Types of Fake Financial News
While some fake financial news is intentionally contrived to stir up the market, other kinds are a result of well-meaning speculation or logical market assumptions that do not end up coming to fruition. Fake financial news can rear its head on a national scale, within the framework of a single industry, or among a fierce competition pool.
Avoiding Fake News
Before the explosion of online news outlets and the ever-evolving definition of “journalism” businesspeople typically relied on the trustworthiness of the source to determine whether the news they were reading was credible. However, with the abundance of modern news venues identifying fake news has gotten more difficult. Fake financial news typically contains red flags, such as:
Fake financial news can drive strategic decision making and shape the competitive landscape. Whether this news relates to the broader business arena, a single industry, or specific competitors, business owners should approach financial news cautiously and analyze its validity. Strategic decisions should only be executed after the information is validated across key criteria.
Our team remains objective and does not respond to the hype as give support to our clients. Will it is important to be diligent and not operate with “head-in-the-sand syndrome”, our accounting team stays alert for “real news”. If your team is unsure of who to believe, you are welcome to contact us with your questions.