writing about The New Columbia Knight-Bagehot Guide business to Economics & Business Journalism e d i t e d by terri thompson Writing About Business Writing About Business The New Columbia Knight-Bagehot Guide to Economics and Business Journalism Edited by Terri Thompson Columbia University Press New York Columbia University Press Publishers Since 1893 New York Chichester, West Sussex Copyright © 2000 Columbia University Press The press gratefully acknowledges the support of Dow Jones & Company in the publishing of this volume Library of Congress Cataloging-in-Publication Data Writing about business : the new Columbia Knight-Bagehot guide to economics and business journalism / edited by Terri Thompson.— 2nd, totally rev ed p cm Originally published: New York: Columbia University Press, ©1991; 43 sections have been written specifically for this book Includes index ISBN 0-231-11834-1 (cloth : alk paper) ISBN 0-231-11835-X (pbk : alk paper) Journalism, Commercial—Handbooks, manuals, etc I Thompson, Terri PN4784.C7 W54 2000 070.4Ј86—dc21 00-059656 ∞ Casebound editions of Columbia University Press books are printed on permanent and durable acid-free paper Printed in the United States of America c 10 p 10 Disclaimer: Some images in the original version of this book are not available for inclusion in the eBook Contents Preface and Acknowledgments The Guide ix xi Terri Thompson, Director, Knight-Bagehot Fellowship in Economics and Business Journalism Writing About Business and the Economy xv Chris Welles, fellowship director, 1977–1985 PART I BASIC CONCEPTS MACROECONOMICS How Economic Systems Work Barbara Presley Noble, ’96 The Political Economy of Government and Business 13 S L Bachman, ’98 Government Regulation and the Regulators 25 John J Oslund, ’97 Economic Indicators 34 John C Finotti, ’95 Demystifying the Federal Reserve 41 David M.Wessel, ’81 MICROECONOMICS Economics of the Firm 55 Vincent Chikwendu Nwanma, ’99 Business Management: Organization of the Firm 63 Scott Aiken, ’76 Sales and Marketing 72 Charles Butler, ’99 Accounting Principles and Practices 79 Ovid S Abrams, ’76   CONTENTS How to Read Financial Statements 98 Susan Scherreik, ’91 Covering Business in Your Town 106 Jacalyn DePasquale Carfagno, ’98 CAPITAL MARKETS, BANKING,AND FINANCE Where Wall Street Meets Main Street 112 Patrick McGeehan, ’94 The Stock Market 119 Sharon R King, ’96 The Bond Market 128 John J Doran, ’99 Derivatives and Other Exotic Securities 139 William Glasgall, ’78 Hedge Funds 147 Jaye Robinson Scholl, ’82 INTERNATIONAL Trade and Global Economics 156 Stephen H Dunphy, ’76 International Business 163 Dave Lindorff, ’79 Global Financial Markets 173 Andrew Leckey, ’79 Covering the World Bank 180 Paul Sweeney, ’86 PART II PRACTICAL REPORTING AND WRITING TIPS How to Use Numbers and Statistics 191 Julia Angwin, ’99 What You Can Get from Public and Private Companies 197 Leah Beth Ward, ’88 What the Government Has in Its Files James V Grimaldi, ’93, and Lawrence J.Tell, ’83 205  CONTENTS The Freedom of Information Act 212 Pamela G Hollie Internet Resources for Business Reporters 216 Robin D Schatz, ’84 How to Use Electronic Data to Generate Company Stories 226 Michael Molinski, ’98 Live Sources—How Do You Get Them to Talk? 234 Peter Alan Harper, ’95 Conducting Live Television Interviews 239 Jan Hopkins, ’83 Business Journalism on TV 246 Mark Piesanen, ’96 Online Journalism 250 Gerri Willis, ’92 Ethics in Business Journalism 255 Aly Colón, ’83 Part III GETTING THE STORY: INVESTIGATIVE TECHNIQUES AND STRATEGIES FOR COVERING SPECIFIC BEATS Personal Finance 265 Pauline Tai, ’89 The Insurance Industry 272 Joseph B.Treaster, ’96 Health Care 280 Trudy Lieberman, ’77 Technology and Telecommunications 291 Craig Miller, ’86 Media and Entertainment 301 Michael Connor, ’81 Real Estate and Urban Development 308 John Gallagher, ’87 The Retail Industry Mel Laytner, ’88 315  CONTENTS The Environment 324 John M Holusha, ’76 Labor and Workplace Issues 331 Kim Norris, ’96 Consumer Reporting 339 Frances Cerra Whittelsey, ’85 Taxes 347 Sandra Block, ’94 Not-for-Profit Institutions 352 Steve Askin, ’91 Founding the Fellowship 362 Stephen B Shepard, editor-in-chief, Business Week Glossary List of Contributors Index 365 407 410 Preface and Acknowledgments From conception to completion, this guide is a true collaboration and includes a collection of essays written and edited by some of the best practitioners of business writing today More than sixty individuals contributed to this work as writers, editors, and reviewers The essays were written by alumni of the Knight-Bagehot Fellowship in Economics and Business Journalism, a midcareer program at the Graduate School of Journalism, Columbia University This guide is their gift to the Fellowship on its twenty-fifth anniversary This is a second, totally revised edition of the Knight-Bagehot Guide, which was first published in 1991 and edited by Pamela Hollie Kluge Though most of the material presented here is new, the mission of this guide is the same as that of the original— to demystify business and economics and to help journalists an important job well The idea to revise this guide grew out of discussions with members of the KnightBagehot Board of Advisors, including the Fellowship’s past directors I wish to especially thank Chris Welles, who directed the program from 1977 to 1985, for his guidance and enthusiastic support of the Fellowship His introductory essay puts business and economics journalism into an historical context The Fellowship owes a special thanks to Stephen Shepard, editor in chief of BusinessWeek, who, with Soma Golden Behr, assistant managing editor of the New York Times, developed the idea for the Fellowship in 1975 With the encouragement of several deans, including Elie Abel, Joan Konner, and, most recently, Tom Goldstein, Columbia Graduate School of Journalism has provided a lively, innovative environment for economics and business journalism education to flourish Several members of the Columbia University faculty, as well as many of the speakers and guests who take part in the nine-month Fellowship program, helped with the guide Among these, I would like to thank Peter Bakstansky, Jim Carey, Tim Carrington, Evan Cornog, John Dinges, Franklin Edwards, Peter Garrity, Ray Horton, Maile Hulihan, Steve Isaacs, Myron Kandel, Catherine Lacoursiere, Marshall Loeb, Ed Martin, Joshua Mills, Floyd Norris, Jonathan Oatis, John Pavlik, Steve Ross, Rosalind Seneca, and Matt Winkler For his loyal assistance, I also thank Robert Petretti For guiding this book through the production process, I thank Ann Miller, executive editor at Columbia University Press, and the team at Impressions Book and Journal Services The Fellowship is indebted to many corporations, foundations, and individuals for their annual financial support Because of the commitment of these supporters, the Fellowship has been able to make a valuable contribution to journalism education, to   CONTRIBUTORS William Glasgall, a 1978 fellow, is a senior editor at Business Week and is responsible for covering personal investing, financial strategies, and lifestyle James V Grimaldi, a 1993 fellow, is national legal affairs staff writer for the Washington Post’s business section Peter Alan Harper, a 1995 fellow, is a national business writer at the Associated Press, where he has covered bankruptcy, the New York City economy, emerging markets, and race and economics Pamela G Hollie, director of the Knight-Bagehot Program from 1987 to 1990, is Kiplinger Professor in Public Affairs Journalism at Ohio State University John M Holusha, a 1976 fellow, is a reporter for the New York Times His beats have included au- tomotive, manufacturing, and the environment Jan Hopkins, a 1983 fellow, is an anchor with CNN Financial News As a result of her live cover- age of the stock market crash of 1987, CNN won its first Peabody Award Sharon R King, a 1996 fellow, is a freelance writer based in New York City Mel Laytner, a 1988 fellow, reported for United Press International and NBC News for fifteen years in New York, London, and Jerusalem He is currently a principal of Laytner’s Linen & Home Andrew Leckey, a 1979 fellow, is a syndicated investment columnist for the Chicago Tribune and a syndicated television reporter for the Quicken.com Money Reports The author of six books, he is also a teaching fellow in business journalism at University of California, Berkeley Trudy Lieberman, a 1977 fellow, is director of Consumers Union’s Center for Health Care Choices and a contributing editor for the Columbia Journalism Review She was formerly health policy editor for Consumer Reports Dave Lindorff, a 1979 fellow, has reported from Japan, the former East Germany, the U.K., Taiwan, Puerto Rico, Malaysia, and Laos as a freelance journalist He spent five years as contributing editor based in Hong Kong for Business Week and is the author of Marketplace Medicine: The Rise of the For-Profit Hospital Chains (Bantam, 1992) Patrick McGeehan, a 1994 fellow, is the Wall Street reporter for the New York Times Craig Miller, a 1986 fellow, is a technology writer and Emmy-winning program host who has ap- peared on numerous cable/satellite networks, including CNN, MSNBC, The Discovery Channel, and HGTV Michael Molinski, a 1998 fellow, is mutual funds editor at CBSMarketWatch.com in San Francisco and former emerging markets correspondent for Bloomberg News He is author of Investing in Latin America: Best Stocks, Best Funds (Bloomberg Press, 1999) Barbara Presley Noble, a 1996 fellow, is a freelance writer and an adjunct professor at Columbia Graduate School of Journalism She is the former workplace columnist for the New York Times Kim Norris, a 1996 fellow, is assistant business editor of the Detroit Free Press CONTRIBUTORS  Vincent Chikwendu Nwanma, a 1999 fellow, is a freelance journalist based in Lagos, Nigeria John J Oslund, a 1997 fellow, is assistant business editor of the Star Tribune of Minneapolis Mark Piesanen, a 1996 fellow, has produced business segments for the CBC and for the primetime evening newscast on MSNBC Currently he is a business consultant with ArthurAndersen USA Robin D Schatz, a 1984 fellow, is a department editor at Business Week Susan Scherreik, a 1991 fellow, is personal finance editor at Business Week Jaye Robinson Scholl, a 1982 fellow, is West Coast editor at Barron’s magazine Stephen B Shepard, who founded the Knight-Bagehot Fellowship in 1975, is editor in chief of Business Week Paul Sweeney, a 1986 fellow, is a contributing editor at U.S Banker magazine His work has ap- peared in the New York Times, the Boston Globe, Institutional Investor, Inc magazine, and Business Week Pauline Tai, a 1989 fellow, is a writer-consultant based in Hong Kong Previously she was manag- ing editor of the Dow Jones China Report, a reporter at Money and the Wall Street Journal, and a former director of the Knight-Bagehot Fellowship Lawrence J.Tell, a 1983 fellow, was a staff writer for Barron’s and legal affairs editor at Business Week, before becoming a business private investigator He is currently president of InterSource International Inc Terri Thompson, a 1981 fellow, is director of the Knight-Bagehot Fellowship at Columbia Graduate School of Journalism Joseph B.Treaster, a 1996 fellow, is a financial news reporter at the New York Times Leah Beth Ward, a 1988 fellow, is Carolinas enterprise reporter for the Charlotte Observer Chris Welles, who was director of the Knight-Bagehot Fellowship from 1977 to 1985, recently retired as a senior editor at Business Week David M.Wessel, a 1981 fellow, is currently Berlin bureau chief for the Wall Street Journal and coauthor of Prosperity: The Coming 20-Year Boom and What It Means to You Gerri Willis, a 1992 fellow, is associate editor at Smart Money Index Abel, Elie, 362–63 Abrams, Ovid, 79 absolute returns, 151 accounting principles and practices, 79–97; balance sheet, 93–95; balance sheet ratios, 95–96; basics of, 80–83; double-entry principle, 82; earnings statement, 91–93; financial statements, 83–90; fundamental accounting equation, 81; international standards, 97; journal entries (example), 85–90; terminology of, 81–82; trial balance sheet, 90–91 See also financial statements accounts receivable, 101 accredited investors, 147 accrual method of accounting, 80 acid-test ratio, 96 action (debit), 82 actuary, 273, 284, 289 additional paid-in capital, 95 adjusted gross income, 350 advertising, 73, 75, 305–6 African Development Bank, 184 Age of Diminished Expectations, The (Krugman), 11 Aiken, Scott, 63 Airline Deregulation Act of 1978, 30 airline industry, 28, 30, 33 alternative investments, 147–48 American depository receipts (ADRs), 120, 125, 177 American Enterprise Institute, 11 American Institute of Certified Public Accountants (AICPA), 97 American Society of Journalists and Authors, 172 American Stock Exchange, 121 Americans with Disabilities Act, 33 amortization, 81, 92 Anderson, Rolf, 11 Angwin, Julia, 191 annual report (10-K), 83, 99, 197–98 Armstrong, Michael, 241–43 Asian Development Bank, 184 Asian financial crisis, 157–59, 176, 185 Asian Pacific Economic Cooperation, 162 Askin, David, 148 Askin, Steve, 352 ask price, 121 assets, 81 AT&T antitrust case, 31 Atack, Jeremy, 12 auction market, 121 auditing function, 80 auditor’s report, 104–5 averages, 193 Babai, Don, 186 Bachman, S L., 13 Bagehot, Walter, 363 Bagehot (Walter) Fellowship, 362 balance sheet, 83, 90–91, 93–95, 100 Bank for International Settlements (BIS), 139, 145 Barings collapse, 139, 144 Barnes, Galen R., 277 barriers to entry, 59–61 Barron’s Dictionary of Business Terms (Friedman), 320 basis swap, 143 bear market, 122 “beige book,” 51 below investment grade bonds, 116 Biaggi, Mario, 236 bid price, 121 “big bath” write-offs, 103 Black, Fischer, 141 Black Monday, 125 Black-Scholes option pricing model, 141 Blake, Gil, 148 blinded study, 286 Blinder, Alan, 45–46 Block, Sandra, 347 Bloomberg functions for business journalists, 231–33 blue chips, 120 board of directors, 66, 71 411  bond market, 39, 50–51, 128–38; basic concepts, 128–31; corporate market, 134–36; general resources, 131–33; municipal market, 136–38; Treasury market, 133–34 Bond Market Association (BMA), 131 bookkeeping, 82 book value, 100 book value per share, 96 bottom line, 91 Brautigan, Richard, 291 Brazilian market, 160 Bretton Woods Conference, 182 Brill, Steve, 249 brownfields, 329–30 Buffett, Warren, 98, 102–3 building a book (of orders), 114 bulletin board system, 121, 220 Bundesbank, 47 Bureau of Labor Statistics (BLS), 36, 39, 315 Bush, George, 272 business consolidation, 110 business crime, 171 business cycle, business environment, 5; government regulation of, 33; political economy of, 13–24; pollution control regulations, 33; workplace rules, 33 business journalism: ethics in, 255–62; Freedom of Information Act and, 212–15; live interviews, 234–38; local reporting, 106–11; news resources for, 111; numbers and statistics use in, 191–96; online journalism, 250–54; private company information, 201–4; public company information, 197–201; television journalism, 246–49 See also electronic financial data; government documents; Internet resources; specific industries business management, organization of the firm, 63–71 business-to-business (B-to-B) marketing, 73, 76 Butler, Charles, 72 cable television, 32 call option, 140 call provisions, 270 Canine, Craig, 10 capital formation, 112 capital gain and loss, 350 capital goods, 35 capitalism, 14 capitalization weighted index, 120 capital markets, banking and finance, 112; bond market, 128–38; derivatives and other exotic securities, 139–46; global financial markets, INDEX 173–79; hedge funds, 147–55; market makers, 113–15; stocks versus bonds, 115–16 See also stock market Capitol Hill, as information source, 209–10 Carfango, Jacalyn, 106 carrying cost, 142 Carson, Rachel, 324 cartel, 30 Carter administration, 25, 30–31, 240–41 cash flow, 312 cash flow from operations, 102 cash method of accounting, 80 cash plus marketable securities ratio, 96 Cato Institute, 187 Celarier, Michelle, 181 Cerra Whittelsey, Frances, 339 certified financial management (CFM), 79 certified internal auditor (CIA), 79 certified public accountant (CPA), 79 CES (Consumer Electronics Show), 292 chairman of the board of directors, 65–66, 71 channel stuffing, 101 chartered accountant, 79 Chatzky, Jean Sherman, 251 Chavez, Cesar, 335 Chicago Board of Trade, 146 Chicago Board Options Exchange (CBOE), 141, 146 Chicago Mercantile Exchange, 146 chief executive officer (CEO), 65–67, 71; global CEO, 178–79; interviews with, 68–69; strategic questions for, 69 chief financial officer (CFO), 67, 71; financial questions for, 70 chief operating officer (COO), 67, 71; operations questions for, 69 China’s market reforms, 163–64 churning, Ciesielski, Jack, 102 Citigroup, 113–14 city hall, as information source, 207–8 Civil Aeronautics Act of 1938, 28 Clausen, A W., 236 Clayton Antitrust Act, 27–28 Clean Air Act of 1970, 33 Clean Water Act of 1977, 33 Clinton administration, 20–21 code of ethics, 261–62 Colón, Aly, 255 combined ratio, 273 COMDEX trade show, 292 “Come with Me to the FOMC” (Meyer), 48 commercial banks, 112  INDEX Committee to Protect Journalists, 168 commodities, 271 common stock, 125 Commonwealth Fund, 284, 288 Communist Manifesto (Marx), 16 company profits, 269 comparative advantage theory, 17 comparative store sales, 315 Compensation and Working Conditions, 39 competitive advantage, 58 computer chip industry, 56, 58 Conference Board, 39 confidence level, 195 Conning & Company, 277 Connor, Michael, 301 consolidation, 110 construction spending, 37–38 Consumer Electronics Show (CES), 292 consumer goods, 35 consumer price index (CPI), 38 Consumer Product Safety Commission, 342 consumer reporting, 339–46; consumer movement and, 343–44; enforcement agencies, 342; experts and, 344–45; fairness in, 341–42; getting the story out, 345–46; news sources, 342–43; role-playing and, 341–42 consumption, 6, 35 contango, 142 controlled clinical trials, 286 controller, 67 convergence, 291, 302 corporate behavior, nature of industry and, 55–57 corporate bond market, 134–36 corporate culture, 65 corporate filings, Internet and, 222–23 corporate values, 65 cost of capital, 38–39 cost of goods sold, 92, 94 costs, 61–62 county clerk, as information source, 206–7 coupon payments, 129 courthouses, as information source, 206–7 “Covering Managed Care—A Resource Guide for Reporters and Editors,” 285 Coy, Peter, 217 CPI Detailed Report, 40 Cramer, James, 253 creative destruction, 18 credit, 82 creditors, 81 credit risk, 268 credits (loans), 183 Cronkite, Walter, 303 Crown, Judith, 12 current assets, 94 Current Industrial Reports, 40 current liabilities, 95 current liquidity ratio, 96 Current Population Survey, current ratio, 96 cyclical industries, 230 cyclical unemployment, database marketing, 73 debit, 82 debt markets, 115 deductions, 351 DeFillippo, Robert, 278–79 DeLollis, Barbara, 278 Democratic Party, traditional economic policy of, 5, 20 depletion, 94 depreciation, 81, 92, 351 depression, deregulation, 25 derivatives markets, 139–46, 270; basics of, 141–42; regulation of, 144–45; resources for, 146; virtual securities, 140 Diageo Plc., 179 direct marketing, 73 discount (on bond), 129 discount rate, 8, 44 discount window, 43 discouraged workers, 6, 332 disintermediation, 304 dividend, 92–93, 116 division of labor, 15 Dodd, David L., 127 Doran, John J., 128 double-blinded study, 286 double-entry principle, 82 Douglas, Alan, 239 Dow Jones Industrial Average (DJIA), 120 Dow Jones Transportation Index, 121 Dream Reaper (Canine), 10 Drudge, Matt, 250 Dunphy, Stephen H., 156 earned income, 351 earnings, 91 earnings from operations, 102 earnings per share (EPS), 92–93, 125 earnings statement, 83, 91 eBay, 116–18 EBITDA (earnings before interest, taxes, depreciation, and amortization), 70  e-commerce, 293 economic growth, economic indicators, 4, 34–40, 268–69; construction spending, 37–38; cost of capital, 38–39; employment data, 36–37; gross domestic product (GDP), 35–36; inflation, 38; of local and regional economy, 106–7; predicting the future, 39; retail sales, 37; trade balance, 38; useful publications for, 39–40 economic philosophers: key economists, 16–18; modern thinkers, 19–20 Economic Policy Institute, 332 economic vocabulary, 5–9 economies of scale, 61 Economist as Savior, 1920–1937, The (Skidelsky), 10 economists, tips for conversations with, 9–10 efficient market theory, 125 electronic financial data: analyzing company data, 228–29; Bloomberg functions for business journalists, 231–33; comparing, 229; contextualizing, 227–28; finding sources, 226–27; to generate company stories, 226–33; trend indentification, 229–31 Ellul, Jacques, 296 e-mail list, 219–20 Employee Benefit Research Institute, 284 employee empowerment, 65 Employee Retirement Income Security Act, 33 Employment and Earnings, 40 employment data, 36–37 End of Laissez Faire: National Purpose and the Global Economic After the Cold War, The (Kuttner), 11 Engels, Friedrich, 16, 18 enterprise profitability, 59–61 environmental data, 328–29 Environmental Defense Fund (EDF), 187, 327 environmental groups, 327–28 environmental journalism, 324–30; brownfields, 329–30; other issues, 330 environmental justice, 326–27 environmental organizations, 187 Environmental Protection Agency (EPA), 328 Equal Employment Opportunities Act, 33 equity, 310 equity hedge funds, 147 equity market, 115 e-tailing, 322–23 ethics in business journalism, 255–62; code of ethics, 261–62; excellence and, 256–57; gifts, 258–61; holding a story, 259–60; reading stories in advance, 257–58; stock ownership and, 257 INDEX European Bank for Reconstruction and Development, 184 European Central Bank, 41, 47, 54 European-style option, 141 European Union (EU), 160 executive organization, 65–68; interviews with senior management, 68–70 expense ratio, 273 expenses, 92 extraordinary items, 92 Fabozzi, Frank, 132 factor markets, Federal Aviation Administration (FAA), 32 Federal Communications Commission (FCC), 29 Federal Election Commission (FEC), 209 federal funds market, 43 Federal Open Market Committee (FOMC), 45, 48 Federal Radio Act of 1927, 29 Federal Reserve, 5, 8, 12, 36, 38, 224; basic working of, 41–44; discount window/rate, 43–44; federal funds interest rate, 43; general principles for journalists, 49–51; practice and mission, 47–49; publication resources and references, 51–52; reserve requirement, 43; theory of, 44–47; Web sites, 53–54 Federal Reserve Act, 44 Federal Trade Commission, 27, 342 Fed Funds rate, 39, 43 fee-for service, 289 feudalism, 14, 16 Fidler, Stephen, 181 FIFO (first in, first out), 94 Financial Accounting Standards Board (FASB), 97, 146 financial assets, 269–70 financial markets: derivatives, 139–42; futures market, 142–43; IPO markets (underwriting activities), 114–18; market makers and, 113–15; stocks versus bonds, 115–16; swaps markets, 143–44 financial planners, 266 financial statements, 83–90; auditor’s report, 104–5; management’s discussion and analysis (MD&A), 100; private companies, 201–4; public companies, 197–201; reading, 98–105; story in the statements, 100–102; write-offs against earnings, 102–4 Finotti, John, 34 firm’s strategy: competitive advantage, 58–59; costs and, 61–62; executive organization,  INDEX 65–68; interviews with senior management, 68–70; niche markets dominance, 58; organizational structure, 64–65; risk factors, 59; and suppliers/buyers, 58 fiscal policy, 5, 43 percent rule, 199 fixed assets, 81, 94 fixed costs, 62 fixed-income security, 130 flipping, 117 float, 125 fluid percentages, 192 Folbre, Nancy, 11 Food and Drug Administration (FDA), 33, 342 Ford, Henry, 65 foreign business reporting, 163–72; business crime, 171; company profiles, 170; foreign correspondent of, 165–66; globalization, 171; information sources, 166–70; international trade, 170; labor and environment, 170; making it pay, 171–72; market liberalization, 170; multinational corporations, 170–71; what to cover, 170–71; World Bank, 180–87 foreign correspondent, 165–66 foreign currency translations and transactions, 92 foreign press clubs, 168 Form 4, 200 Form 8-K, 199 Form 10-K, 198 Form 10-Q, 198–99 Form 990, 354–57 Form 990-PF, 356–57 forums, 220 Foss, Murray, 11 Freedom of Information Act (FOIA), 205, 210–15; exemptions to, 213–14; getting help, 214–15; requesting information under, 212–14; tips for reporters, 215 frictional unemployment, Friedel, Robert, 10 Friedman, Jack P., 320 Friedman, Milton, 18 Friends of the Earth, 187 Frumkin, Norman, 11 fund of funds, 152 futures, 140 futures markets, 142–43 futurist, 292 Galbraith, John Kenneth, 19 Gallagher, John, 308 Gartner Group, 293 Gates, Bill, 33 GDP (gross domestic product), 6, 35–36 General Agreement on Trade and Tariffs (GATT), 162 generally accepted accounting principles (GAAP), 79, 97, 99, 274 general obligation bonds (GO), 136 Gibson, William, 296 Gilder, George, 291 Glasgall, William, 139 Glass-Steagall Act, 28, 32, 113 global economy, 23, 156–62, 171; Asian financial crisis and, 157–59; European Union (EU) and, 160; resources for, 161–62; Russian financial crisis, 159 global financial markets, 173–79; rewards versus risks, 175–78 Golden, Soma, 362 “Goldilocks” growth, 160 Goldman, Sachs & Co., 113–18 Goldstein, Steven, 274 go long/short, 150 government, political economy of, 13–24 government documents: Capitol Hill, 209–10; city, county, and state filings, 207–8; in courthouses, 206–7; getting the documents, 210–11; Internet sources, 224; political records, 209; regulatory agencies, 208–9; as source of information, 205; what to ask for, 206–10; where to go, 206–10 government regulation, 25–33; current environment, 32–33; deregulation, 31–32; derivatives markets, 144–45; fall of, 30–31; historical background of, 25–28; major laws of, 26–27; pollution control, 33; the regulators and key industries, 28–30; rise of agencies and laws, 28–29; traders versus takers, 27; workplace rules, 33 Graham, Benjamin, 127 Grameen Bank, 18–19 Granite Capital Management, 148 Grant, Lorrie, 236 Great Depression, 4, 17, 28 greenfields, 329 Greenspan, Alan, 9, 23, 45, 48–51 Grimaldi, James V., 205 gross domestic product (GDP), 6, 35–36 Grove, Andy, 304 growth, growth stocks, 120, 125 Guide to SEC Filings, 201 Hamilton, Alexander, 19  Handbook of Fixed Income Securities (Fabozzi and Pollack), 132 hard assets, 271 hard window, 183 Harper, Peter Alan, 234 Harriman, Edward Henry, 26 Harvard Pilgrim Health Care Foundation, 288 health care industry, 280–90; absolute and relative risk of treatments/cures, 285–86; business stories, 280–81; causal inferences and association, 287; clinical stories, 285; conflicts of interest, 288–89; cost shifting, 282–83; glossary for, 289–90; health policy issues, 280–81; key concepts, 281–89; loss ratios, 283–84; peer review, 287–88; quality issues, 283; research studies, 286; resources for, 289; risk selection, 281–82; sources of information, 284–85 health maintenance organizations (HMOs), 283, 289 hedge funds, 147–55; current status of, 150–52; defining the industry, 150; good/bad leverage, 150; styles and investment goals, 152–54 Heilbroner, Robert L., 18n Henwood, Doug, 11 Heritage Foundation, 187 high-yield bonds, 116 Hill, James J., 26 historical spread, 229 Hitler, Adolf, 29 HMOs (health maintenance organizations), 283, 289 Hollie, Pamela G., 212 Holsendolph, Ernest, 236 Holusha, John, 324 Hopes Betrayed, 1883–1920 (Skidelsky), 10 Hopkins, Jan, 239 households, housing starts, 37, 40 human capital, 35 Huntington, Collis Porter, 26 hyperinflation, 46 income statement, 83, 100 index fund, 125 Index Medicus, 287 index of leading indicators, 39 individual investor, 269 industrial revolution, 25–28 industry structure, 55–57; barriers to entry, 56; corporate behavior and, 55–57; life cycle analysis, 56; product differentiation, 55–57; profitability trends, 56; strategy as a response to, 57–58 INDEX inflation, 6–8, 35, 38, 268; unemployment and, initial public offering (IPO), 114–18, 125 in process research and development, 103 inputs, inside director, 66, 71 Institute of Certified Financial Planners, 266 Institute of Medicine (IOM), 283 institutional investor, 125 insurance cycle, 274 insurance industry reporting, 272–79; fundamentals of business, 273–75; getting the story, 275; regulation of, 276–77; trends, 275–79 insurance product, 270 intangible assets, 81 intangibles, 94–95 intellectual property, 306–7 Inter-American Development Bank, 184 interest income, 92 interest rate, 5, 8, 268 interest rate risk, 268 Internal Revenue Service (IRS), 347–48, 350 International Association for Financial Planning, 266 International Bank for Reconstruction and Development (IBRD), 183 international business, 163–72 See also foreign business reporting International Development Association (IDA), 183 International Federation of Journalists (IFJ), 168 International Finance Corp (IFC), 183–84 International Labor Organization, 166 International Monetary Fund (IMF), 12, 47, 54, 158, 160–62, 166, 184–85; history, mission, and goals, 182–84; as journalistic subject, 180–85; sources and stories development, 185–87 International Swap & Derivatives Association (ISDA), 144, 146 international trade, 156–57, 170 Internet resources: bond market resources, 131–32; business resources of, 305; corporate filings, 222–23; derivatives and swaps, 144–45; economic data sources, 12; e-mail newsletters, 219–21; for experts and sources, 223–24; Fed Web sites, 53–54; financial sites, 225; government agencies, 224; market data, 225; news resources, 111; online communities, 219–21; online journalism, 250–54; political economy and, 22–24; public company disclosures, 197–201; resources for business reporters, 216–25; search engines and portals, INDEX 218–19; SEC’s Web site, 99; stock exchanges, 225; World Wide Web and, 221–22 Interstate Commerce Commission (ICC), 26, 29 inventories, 94 inventory turnover ratio, 320 investment banks, 112 investment goods, 35 investment grade bonds, 135 investment vehicles, 269–71 invisible hand of market forces, 15 Islam, 15–16 Jacobs, Jane, 27 Jacoby, Sanford, 12 January effect, 126 Japan’s political economy, 14 Jefferson, Thomas, 19, 25 Jett, Joseph, 234–35, 238 joint and several liability, 329 Jones, Alfred Winslow, 147, 150, 155 “Journalist’s Guide for Health Stories, A,” 287 junk bonds, 116, 135 Kaiser Family Foundation, 284 Kaku, Michio, 292 Kellen, Konrad, 296 Keynes, John Maynard, 3–4, 10, 17–18, 20 Keynesian economics, 4, 18, 23 King, Sharon R., 119 Knight-Bagehot Fellowship in Economics and Business Journalism, 362 Kohler, Horst, 183 Kramer, Larry, 253 Krugman, Paul, 11, 19 Kuttner, Robert, 11 labor force, labor force participation (LFP), 6–7 labor unions, 332 labor and workplace issues, 331–38; demographics, 336–37; productivity, 332; technologies, 337–38; unions, 332–35; working conditions, 335–38 Laffer, Arthur, 19–20 Law of Large Numbers, 194–95 Laytner, Mel, 315 leading in the polls, 195 Leckey, Andrew, 173 Leeson, Nicholas, 144 leveraged contracts, 142 liabilities, 81 libertarianism, 21  Lieberman, Trudy, 280 LIFO (last in, first out), 94 Light, Larry, 277 Lindorff, Dave, 163 lines of business, 71 liquid assets, 81 liquidity risk, 268 list serv, 219–20 load (initial sales charge), 177 loan facilities, 184 local business journalism, 106–11; big businesses (players) in town, 107–9; local and regional economy, 106–7; strategy for reporting, 109–11 long bond, 134 long bond rate (30-year), 39 long-run analysis, 59 long-short strategy, 150 Long-Term Capital Management (LTCM), 144, 148, 150 long-term liabilities, 95 loss ratio, 273 macroeconomics: basic concepts and terms of, 3–12; circular-flow model, 5; defined, 4; government policy and key participants, 4; Internet research sources, 12; suggested readings for, 10–12 See also economic indicators; Federal Reserve; government regulation; political economy macro hedge funds, 149 Madison, James, 212 make-good, 75 making a number, 318 Malkiel, Burton G., 124 Malone, John, 303 managed care, 289 management’s discussion and analysis (MD&A), 100 “manorial capitalism,” 12 manufacturer’s new orders, 37 margin, 318 margin dollars, 318 margin of error, 195 market capitalization, 126 market correction, 122 market crash, 122 marketing See sales and marketing market liberalization, 170 market makers, 113–15 market neutral hedge funds, 153 markup, 318 Marsh & McLennan Companies, 275  Marx, Karl, 16–17 Marxism, 21 mathematics in business journalism, 191–96; averages (mean), 193; average versus the individual, 193–94; fluid percentages, 192; Law of Large Numbers, 194–95; normal distribution, 195; static percentages, 192; surveys and polls, 195–96; units of measure, 191, 192 McGeehan, Patrick, 112 McGrath, John, 179 McNamara, Robert S., 183 mean, 193 media and entertainment, 301–7; advertising, 305–6; convergence of media and markets, 302–3; intellectual property and regulation, 306–7; technology influences, 304–5 median, 193 Medicaid, 290 Medical Letter on Drugs and Therapeutics, 289 Medicare, 290 MEDLINE, 289 Merrill Lynch & Co., 113 Mexican financial crisis, 184–85 Meyer, Laurence, 45, 48 microeconomic theory, 55; barriers to entry, 59–61; corporate behavior and nature of industry, 55–57; economics of the firm, 55–62; enterprise profitability, 59–61; organization of the firm, 64–68; sales and marketing and, 72–78 Microsoft, 21, 33 Miller, Craig, 291 Molinski, Michael, 226 monetarism, 18 monetary policy, 5; basic workings of, 41–44; defined, 43; Federal Open Market Committee (FOMC), 45 monopoly, 60–61 Monthly Labor Review, 40 Moody’s, 166 Morgan, John Pierpont, 26 Morgan Stanley Capital International (MSCI) Europe, Australasia, Far East (EAFE) Index, 177 Morgan Stanley Dean Witter & Co., 113 most active stocks, 126 multinational corporations, 170–71 municipal (muni) bond, 136–38 Municipal Securities Rulemaking Board (MSRB), 131 mutual funds, 230, 270 Nasdaq Composite Index, 120–21 INDEX Nasdaq 100 index, 121 Nasdaq stock market, 119, 121–22 National Advertising Division (NAD), 342 National Association of Home Builders, 314 National Association of Insurance and Financial Advisors, 278 National Association of Insurance Commissioners, 278 National Association of Purchasing Managers (NAPM), 37 National Association of Realtors, 314 National Association of Securities Dealers, 121 National Bureau of Economic research, 12 National Conference of State Insurance Legislators, 278 National Highway Traffic Safety Administration (NHTSA), 339, 343 National Labor Relations Act (NLRA), 28, 334 National Labor Relations Board (NLRB), 334 nationally recognized municipal securities information repositories (NRMSIRs), 359 National Women’s Health Network, 286 National Writers Union, 171–72 natural monopoly, 60–61 Natural Resources Defense Council (NRDC), 327 Nelson’s Directory of Business Research, 110 net book value per share of common stock, 96 net income, 93 net sales (revenue), 92 network, 290 net working capital to total assets ratio, 96 net worth to total debt ratio, 96 New Deal program, 334 new issues, 120 New York Stock Exchange (NYSE), 119, 121 niche markets, 58 Nobel, Barbara P., Nokia Corp., 178 nonfarm payroll employment, 36 nongovernmental organizations (NGOs), 166, 182 nonprofit organizations, 207 See also not-forprofit institutions normal distribution, 195 Norris, Kim, 331 not-for-profit institutions, 207, 352–61; disclosure documents, 353–57; expert advice, 360; Form 990, 354–55; fundraising of, 357–59; investigative tips, 353–57, 359; obtaining Form 990 and 990-PF, 356–57; Schedule A, 354–55; tax-exempt bond documents, 359; Web sites for information, 357 INDEX notional position, 144 Nwanma, Vincent, 55 “objectivist” philosophy, 23 observational studies, 286 Occupational Safety and Health Administration, 33 offering registration statement, 200 offshore funds, 151 oil crisis, 30 oil industry, deregulation of, 30 oil trusts, 25–26 Okun, Arthur, 7, 19 Okun’s Law, Ollila, Jorma, 178 one-to-one marketing, 73–74 online journalism, 250–54 open market activities, 133 open outcry system, 142 operating income, 92 operating managers, 67 opportunity (or real) costs, 61 organization, executive, 65–68; glossary of organization management, 71 organizational structure, 64–65 organization chart (org chart), 64 Organization of Economic Cooperation and Development (OECD), 12, 162 Organization of Petroleum Exporting Countries (OPEC), 30 original equipment manufacturers (OEMs), 58 Oslund, John J., 25 outputs, outside director, 66, 71 oversubscribed offering, 115 over-the-counter (OTC) market, 121, 134 owner’s equity, 81 Oxfam International, 187 Paltrow, Scot, 278 participative management, 65 par value, 95, 129 Passell, Peter, 12 peak of economic cycle, Peddling Prosperity (Krugman), 11 Peiser, Joseph, 275 penny stocks, 120 percentage points, 196 personal computer (PC) revolution, 291 personal exemption, 351 personal finance reporting, 265–71; product research, 267–68; tips for starting, 267–69; understanding your reader, 266–67  personal interviews, 234–38; importance of preparation, 235–36, 240, 244; live television interviews, 239–45; search for new perspectives, 237–38 Pesek, William, Jr., 49 phantom stock, 201 Phillips, A W., Phillips curve, Piesanen, Mark, 246 point-of-sale (POS), 321 point-of-service (POS), 290 political economy: defined, 14; economic philosophers, 14–18; of government and business, 13–24; the Internet age and, 22–24; theory and practice, 21; why philosophy matters, 14 political records, as information source, 209 Pollack, Irving, 132 polls and surveys, 195–96 pollution control regulations, 33 Pop Internationalism (Krugman), 11 portals, 218 Porter, Michael, 237 posting, 219 potlatch economy, 14n Poynter Institute for Media Studies, 256 predatory pricing, 33 preferred provider organization (PPO), 290 preferred stock, 126 premium (on bond), 129 prepayments and deferred charges, 94 price weighted index, 120 primary dealers, 133 principal, 129 principal risk, 268 private companies, researching information on, 201–4 producer price index (PPI), 38 product differentiation, 55–57 productivity, 8–9 productivity gains, 332 product markets, profit, 91, 321 profit maximization, 55 promissory notes, 95 property, plant and equipment (PPE), 60 prospectus, 114, 200 proxy statement, 104, 198 public companies: annual report to shareholders, 197–98; disclosure requirements, 197–201; Form 4, 200; Form 8-K, 199; Form 10-K, 198; Form 10-Q, 198–99; proxy statement, 198; registration statements, 200–201; Schedule 13-D, 199–200  put option, 140 quarterly report (10-Q), 83, 100 quick-asset ratio, 96 quiet period rule, 200 quit rate, 37 railroad industry, 25 Rand, Ayn, 23 randomization, 286 randomized control trials, 286–87 random sampling, 195 Random Walk Down Wall Street, A (Malkiel), 124 Rankin, Robert, 13 rating agencies, 135, 137 rating sweeps, 306 reaction (credit), 82 Reagan administration, 25, 31 real costs, 61 real estate and urban development, 308–14; architect, 313; broker, 312; construction lending, 309–10; contractor, 312–13; developer, 311; identifying the players, 310–11; lender, 311–12; regulator, 313; tax lawyer, 313–14; trade associations, 314 real GDP, recessions, recovery phase of economic cycle, red herring, 114, 200 registration statements, 200–201 regulatory agencies, as information source, 209 Reich, Robert, 19, 291 relative returns, 151 rent roll, 312 Reporters Committee for Freedom of the Press, 214 Republican Party, traditional economic policy of, reserve requirement, 43 restructuring charges, 102 retail industry, 315–23; data sources for, 315–19; e-tailing and, 322–23; inventory turnover, 320; location factor, 319–20 retail investor, 126 retail sales, 37 retained earnings, 95 return on average equity, 60 return on equity (ROE), 60 revenue, 92 Ricardo, David, 17, 22 risk arbitrage, 152 risk premium, 135 INDEX road show, 114 Robertson, Julian, 147 Robert Wood Johnson Foundation, 284 Rockefeller, John D., 26 Roosevelt, Franklin D., 17, 20, 28, 334 Roosevelt, Theodore, 25 Rubenstein, Howard, 235 Rubin, Robert, 13, 20 Russell 2000 index, 120–21 Sachs, Jeffrey, 19 sales and marketing, 72–78; four P’s of, 74; function of, 74–77; the Internet and, 77; reporter’s angle on, 77–78; in search of stories, 73–74 Salinger, Pierre, 297 Salomon Smith Barney, 113 same store sales, 316 Santa Claus rally, 126 Schatz, Robin D., 216 Schedule A, 354–55 Schedule 13-D, 199–200 Scherreik, Susan, 98 Scholes, Myron, 141 Scholl, Jaye Robinson, 147 Schumpeter, Joseph, 18 Scott, David L., 124 search engine, 218 “Secret’s Out: What Will Fed Watchers Do Now that Greenspan Tells It Like It Is?, The” (Pesek), 49 Securities and Exchange Act of 1934, 28 Securities and Exchange Commission (SEC), 28, 63, 79, 83, 98–99, 114, 151, 177, 197, 205, 224, 276, 359 selling price, 318 Sen, Amartya, 19 “7 percent solution,” 114 shareholder, 119 shareholders’ equity to debt ratio, 96 Shepard, Stephen B., 362 Sherman, John, 26 Sherman Antitrust Act, 26, 28 short interest, 126 short-run profitability, 59–60 short-sellers hedge funds, 154 shrinkage, 318 Siegel, Jeremy J., 124 Silent Spring (Carson), 324 Skidelsky, Robert, 10 slavery, 14 Sloane, Leonard, 277 Small Business Administration (SBA), 204 INDEX Smith, Adam, 14–16, 18, 21, 24 socialism, 14 Society of American Business Editors and Writers (SABEW), 261 soft money, 209 soft window, 183 Soros, George, 147 spam, 220 special drawing rights (SDRs), 184 speculative grade bonds, 135 spiders, 218 spread, 116 Standard & Poor’s (S&P), 166 Standard & Poor’s 500 Index (S&P 500), 120 Standard Industrial Classification Manual, 315 stand-by arrangements, 184 state filings, as information source, 206–7 statement of cash flows, 100 statement of operations, 100 static percentages, 192 statistical significance, 194 Steele, Bob, 256, 260 Stein, Herb, 11 Steinhardt, Michael, 147 stock, 95, 115, 119 stock appreciation rights (SARs), 201 stockholders’ equity, 95 stock index future, 126 stock market, 119–27; defining the markets, 122; glossary of terms, 125–27; indexes, 120–21; reporting tips, 123–24; where stocks trade, 121–22; writing about, 123 stock market crash, 122 stock option, 126 Stocks for the Long Run (Siegel), 124 strike price, 141 structural unemployment, subsistence, 14 Sullivan, Brian P., 277 Summers, Lawrence, 23 sunk costs, 62 Superfund Act, 33 “supply-side” economists, 19 Suriewicki, James, 251 Survey of Current Business, 40 surveys and polls, 195–96 Sutch, Richard, swap, 140 swaps market, 143–44 swaptions, 140 Sweeney, Paul, 180 sweeps, 306  Systems of Survival: A Dialogue on the Moral Foundations of Commerce and Politics ( Jacobs), 27 table of organization (T/O), 71 Tai, Pauline, 265 T account, 82 taking behavior, 27 tangible assets, 81, 271 taxable income, 351 tax credits, 351 taxes, 347–52; glossary of terms, 350–51; regulations for, 348–49; writing about, 349–50 taxpayer abuse, 348 tax shelter, 351 technology and telecommunications, 291–300, 304–5; convergence, 291; “experts” and reporter as translator, 293–95; media hype of, 295–98; searching news value in, 298; sources of information, 298–300; technorealism, 296–97; trade show of, 292–93 Telecommunications Act of 1996, 31 telecomputer, 291 television interviews, 239–45; dos and don’ts of, 244–45; importance of preparation, 240–44 television journalism, 246–49; audience demographic and dynamics, 246–47; point and share ratings, 248–49; transition to, 247–48 Tell, Larry, 205 Temin, Peter, 12 Thai baht collapse, 158 Thalhimer, Mark, 250 thirty-year bond rate, 39 thread (topic), 219 Thurow, Lester, 19, 36 Tillinghast Towers-Perrin, 277 Toxic Release Inventory (TRI), 328 Tracking America’s Economy (Frumkin), 11 trade, 156–62 trade balance, 38 trade disputes, 161 trade secrets, 213 trading economy, 27 trading pits, 142 Transparency International, 187 Treaster, Joseph B., 272 Treasury bill, 133 Treasury bond, 134 Treasury market, 133–34 Treasury note, 134 trial balance, 90 triple-witching hour, 126  trough of economic cycle, trust-busting laws, 26 trusts, 26 turns, 320 underwriter, 290 underwriting activities, 114, 273 unemployment, 6, 332; inflation and, 7; types of, unemployment rate, 36 Uniform Commercial Code (UCC) records, 203 United Nations (UN), 182 U.S Census Bureau, 224 U.S Commerce Department, 6, 35, 37, 39 U.S Conference of Catholic Bishops, 187 U.S General Accounting Office (GAO), 184, 210 U.S Government Printing Office (GPO), 224 U.S Labor Department, 38 U.S Tax Court, 206–7 unqualified approval (opinion), 104 upfront, 306 upfront markets, 75 value investing, 126 Vanderbilt, Cornelius, 26 variable costs, 62 Vogel, Steve, 278 Volcker, Paul, Wagner Act, 334 Wallace, Mike, 235–36 INDEX Wall Street Words (Scott), 124 Ward, Leah Beth, 197 Wealth of Nations, The (Smith), 15 Welch, Jack, 179 Welles, Chris, xv Wessel, David, 41 Williams, Brian, 248 Willis, Gerri, 250 Wilshire 5000 index, 121 Winbush, Don, 235 Wolfensohn, James D., 183 women, labor force participation, workplace issues, 331–38 See also labor and workplace issues workplace rules, 33 World Bank, 12, 143, 161, 166; history, mission, and goals, 182–84; as journalistic subject, 180–87; Operations Evaluation Department (OEC), 186; sources and stories development, 185–87 World Debt Tables, 186 World Development Indicators, 186–87 World Development Report, 181, 186 World Trade Organization (WTO), 161–62 World Wide Web See Internet resources write-offs against earnings, 102 Y2K readiness, 293 yield, 129 “zero-sum society,” 19 Zyman, Sergio, 73–74