Investigative Reporting Handbook – Chapters 13 & 14

by Kevin Clang

The value of knowing how to report on businesses as really shown itself in the past few months.  With the possible economic recession, President Barack Obama’s stimulus package and the bailouts and bankruptcies of many major American companies, business reporting has taken its place on the front page of many newspapers.  

Like education and healthcare before it in previous chapters, business reporting will always be a necessity in one form or another.  For this reason, it is an invaluable skill to have.

Perhaps the easiest companies t o investigate are those that are publicly traded in the stock market, as there are several laws and regulations that they must follow.  The SEC’s Wed site is a great starting point for any  investigation.  There, one will find all of the quarterly documents and files that every publicly traded company must release.  

With hindsight being 20/20, if today you looked at the reports from Chrysler over the past five to ten years or so, one would definitely be able to see the warning signs long before anyone actually spotted them.  Understanding the terms used in a company’s annual reports is key to doing this.

After paper trails like these, undoubtably the most useful sources any reporter will use are human ones.  Papers give details, but human sources provide necessary insight into just what is going on in any business.  Ideally the major movers and shakers in any business would be honest and forthcoming with information, but unfortunately this often is not the case.  Instead, it is sometimes useful to contact academics or other experts.

Steven Pearlstein of the Washington Post has made a career out of doing all of this.  A  recent Pulitzer Prize winner for his commentary on the economy, Pearlstein investigates America’s most important businesses every week in his column.  

While it would be easy to be all doom and gloom in such a column, especially given the current state of the economy, Pearlstein resists.  Instead, he uses his intelligence and experience to offer constructive  criticism to the nation’s largest conglomerates, and has written many articles on just what the American people have to do in order to save them.  Through his hard work he has earned the trust of not only the American public, but also the businesses that he has investigated.

The story extends much further than the owners and experts  of the business game; sometimes a reporter will have to move into the warehouse.  Stories can benefit from both  white collar and blue collar perspectives, and for this reason it is important to investigate how a CEOs decisions will affect the average Joe.  The Detroit Free Press has done an exemplary job in doing just this while looking into the city’s failing auto industry.

America needs business.  But like everything else, businesses can become corrupted, lazy or poor, so they need a watchdog to keep them in line.  It is a business reporter’s  job to understand the complicated theories and transactions associated with any business dealing.  By doing this, they exercise a check on the amount of power any business has.  If we had been better at looking out for businesses sooner in the  millennium, we may have saved  Wall Street and Detroit.

Hey, Texas! Secession Solves Nothing, Stay Together for the Kids

by Kevin Clang

(This story originally ran in The Pendulum on April 21)

Politicians like to demonstrate the unity of our country by pointing out the idea that there are no red states or blue states, just the United States.  It is a nice line if your running for an elected office, but it could not be further from the truth.  While there have always been major ideological differences between our many states, rarely in our history have they been so numerous. 

Red and blue political beliefs are growing further and further apart and it is getting increasingly difficult for the two to understand each other.  Big government versus small government.  Pro-life versus pro-choice.  In today’s America, you’re either a gay-marrying, baby-killing member of a blue state or a gun-toting, Bible-loving member of a red state.

Texas Gov. Rick Perry suggests secession as a viable option when faced with dominance by an opposing party in Washington. (From rickperry.org)

So it is really no surprise to hear talks of sovereignty and even secession from some states unhappy with Washington’s current spending policies.  Alaska, Vermont, and most recently Texas have all spoken of secession in the past few years.  With the struggling economy, the United States finds itself at its lowest point in recent memory.  Morale is down and the states are starting to point fingers at each other.

Let’s ignore that statements are made to get attention, not to be taken seriously.  Also, let’s ignore that 75 percent of Texans don’t even want to secede, and that even mentioning the action is crazy un-American.  Let’s too ignore that the possibility of secession is unrealistic and remote at best; states would have to defeat the most powerful military on the planet to succeed in seceding.  Does the United States have a problem?  If so, how do we fix it? 

Since there is no idiot’s guidebook to repairing feuding states within a country, I consulted the next-best source: Relationshiprich.org, a website that uses Dr. Phil’s books to give advice to troubled married couples.  When you think about it, the United States is not unlike an unhappy, old married couple on its last nerve. 

We’ve experienced the blissful union of 1776, the mid-life crises Civil War, and moved into old age with World War II.  Now, it’s like we’re recently retired: we worked hard and now have the attention and respect of everyone around us, but beneath the surface we’ve grown bitter as we’ve all drifted away from each other.  And all the money we saved up is running out.

Dr. Phil stresses listening and understanding as the two main things bickering spouses need to do for each other. From drphil.com

 

First off, this constant arguing is not helping anyone.  States need to learn to listen to each other’s gripes rather than constantly trying to defend themselves.  Simply listening to each other without trying to advance an agenda may help defuse the situation.  Incessant attacks just exacerbate the problem and increase potential damage.  The first step to understanding each other’s differences will be to acknowledge them.

Listening to each other will give us greater perspective and allow us to see the issues from the other side’s point of view.  This will broaden our picture, letting us see past red or blue issues and focus more on America’s issues.  Our differences are one thing that makes America great.  The country needs this back and forth between ideas.  If one side secedes, the country loses.  The key is to talk about these matters without allowing them to anger us.

The blame game also needs to stop.  Both sides have made mistakes.  While taking responsibility off of ourselves and putting them on the other states may feel good, especially when we know that we are right, it turns the others into adversaries.  This opens the door to more argument, which only leads to guilt, shame and resentment.

Being the minority party is just part of politics: sometimes you’re up and sometimes you’re down, but in the end the American people will decide what is best for them and we need to accept that even if we don’t agree with current policies.  It would be a tragic shame to lose any one of the fifty states.  Each is so unique and special, adding its own distinctive flavor and culture to the country.  Seceding is equivalent to giving up; by doing so, the other side automatically wins.  Perhaps Congress could benefit from hiring a marriage counselor or two to sit in on vitriolic sessions – maybe then they could see past their own egos and consider what is best for the country.

Thomas Mac Mahon Speaks About Recessions, Bailouts, and the Economy at Elon University

by Kevin Clang

Thomas Mac Mahon, Chairman of the Board and former CEO of Laboratory America (LabCorp) came to Elon University’s Love School of Business on Thursday, February 12, to discuss how to manage a public company during the current economic downturn with Elon business students and faculty.

Thomas Mac Mahon

Recession-Proof

LabCorp is a medical testing facility with over 40 offices across the country, but mainly based in North Carolina.  They are the largest Cancer testing facility in the world and the largest employer in the Piedmont Region of North Carolina with over 4,000 workers.  This makes them one of the top five employers in the state.

The corporation runs thousands of tests every hour and about two million a day.  About 90 percent of these tests are returned to doctors offices within 24 hours of completion.  LabCorp posted $850 million in earnings in 2008.

“Recessions are very good for the health care industry,” said Mac Mahon, adding that increased stress during economically trying times often leads to more visits to the doctor.  Mac Mahon went as far to say that the health care industry is “recession-proof.”

Cash Is King

But not every industry is so lucky.  The best way to survive, according to Mac Mahon, is to “have a lot of cash on hand.”  Obsessively crunching numbers and using the standby ‘revenue minus expenses equals profit’ equation will never go away.  “Manage your company by the metrics,” Mac Mahon stated, “there is value in appreciating numbers.”

With cash, Mac Mahon stated a midsized company can then show strength in a down market by investing in growth by buying out smaller companies or repurchasing shares.   “By buying back your own shares, there are then less shares in the market, making their value rise.”  he explained.

Mac Mahon particularly stressed the need for the process of risk management, a technique used manage a company’s uncertainties and threats.  “Anticipate the negative, believe the worst will happen,”  he stressed.  “The concept of risk management is more important than ever.”  Mac Mahon believed that a greater attention to risk management may have saved the banking industry from their collapse in late 2008.

Plenty of Blame to Go Around

In the late 1990s, people were signing up for loans “equal to more than the value of their home,” said Mac Mahon, a drastic change from the past process.  Everything is fine until people can not afford to pay their bills, which Mac Mahon says “really hurts us.”

Mac Mahon stressed that we need to loosen up the markets in Washington, and that President Barack Obama’s plan to regulate CEO pay was a “serious mistake.”  If someone does a good job, he explained, they should be rewarded.  If they fail they should be fired.  Under his philosophy, there is no need to regulate pay: “Compensation should be linked to appreciation of stock, with no maximums.”

It is up to CEOs and Chairmen to make sure stock appreciation increases.  Mac Mahon encouraged Elon students to work hard and be ambitious, and in the end they would be rewarded for their efforts.  “People look for confidence in their leaders,” he said,  “communicate to the people who need to hear your story.”