Business Literacy
Material information
Is any news that could influence a reasonable investor's decision to buy or sell stock. The study showed concrete examples of how public relations practitioners used news media to disseminate false and misleading information, or deliberately withheld information from news media.
______is the legal term meaning the person making the libelous statement knew it was false or recklessly disregarded its truth or falsity.
Malice
A company that owns/acquires its upstream suppliers or downstream supply chain components such as a computer manufacturer that purchases a silicon chip company is an example of _______________________.
Vertical integration
When should a key client be informed of a dip in stock prices?
When the stock prices dip below 3-10 prices
barred from tipping or trading on information not available to the public include corporate executives, public relations personnel, outside accountants, lawyers, outside public relations counsel, and other professionals with access to corp plans
insiders
Private Securities Litigation Reform of 1995
made reforms to the Securities Act of 1933 and Securities Exchange Act of 1934 - restricting such abusive litigation practices as routine filing of class action lawsuits against public companies following sharp drops in stock prices and abuse of the discovery process by plaintiff's attorneys to extort settlements from publicly traded companies that might be willing to settle simply to avoid costly litigation.
The Security Exchange Act of 1934
mandates disclosure. While the actual legislation says little specifically about publicity, the regulations apply to how we practice public relations. The real aim is to level the playing field for all investors. The law requires filing specific information with the SEC to make it available to the public
information that is likely to have a significant effect on securities prices or if it is likely to be considered important by a reasonable investor when making decisions to buy, hold, or sell shares
material information
companies heading toward bankruptcy sometimes start negotiations with major secured creditors
prepackaged bankruptcy
Once a copyright expires, the work enters the ______ and may be used by anyone.
public domain
to give an honest debtor a "fresh start" in life by relieving the debtor of most debts and to repay creditors in an orderly manner to the extent that the debtor has property available for payment
purpose of federal bankruptcy laws
Chapter 7 bankruptcy
purpose to achieve fair distribution to creditors of the debtor's available with non-exempt property; available to both individual and business debtors
The Investment Company Act of 1940 & The Investment Advisers Act of 1940
regulate investment companies and advisers
Securities Act of 1933
restricts corporate communication before and during the period that new securities are being registered
any director, executive officer, investor relations or public relations officer, or other person with similar functions
senior official
Companies may be protected from liability for predictions about earnings and performance as long as such forecasts are tempered by "meaningful" cautionary statements telling investors why the projections might fail to come true
true, Safe Harbor for Forward Looking Statements
Securities Act of 1933 and the Security Exchange Act of 1934 reason for enaction
were enacted following the 1929 stock market crash. These acts contain checks and balances for securities-related actions and remain in place today. The need for such legislation grew out of abuses in the securities industry. Investors' and brokers' devious practices were destroying small investors. While these laws are complex, certain sections directly relate to public relations practice as discussed below.
What Acts can you call on when a rival company is attempting to ruin competition?
Sherman/Clayton Act and Robinson Putnam Act make engaging in activity that ruins competition illegal. Overselling wording in news releases announcing acquisitions and divestitures can be cited as violations.
Horizontal vs Vertical businesses
" In horizontal businesses, production units create similar
The gag period is the same as a blackout
"False - The gag period should not be confused with a blackout. Several types of blackouts exist in contracts,
If your organization has a decentralized decision making process, what are the downsides of this?
"This decision making process can create organizational silos that hinder interaction and cooperation between units, hamper efforts to maintain product uniformity and permit
Reno V. American Civil Liberties Union
1997 Supreme court decision: speech on the internet is fully protected by the First Amendment
When two companies of comparable size go through a merger, it is assumed that in two to three years only ____ of the workforce will remain
50 to 60 percent
If a CEO is provided a Golden Package, what is it?
A Lucrative severance packages for departing CEOs
As a financial PR manager, you're asked to do a Balance sheet. What does this entail?
A statement of assets, liabilities and capital on a specific date. The report details the balance of income and expenditure over the preceding accounting period.
What abilities do you need to be considered business literate?
Abilities to use financial and business information as the basis for decisions that help an organization achieve success
Responsibilities of those in analyst relations
Communicate with research analysts who track a particular stock or group of stocks for independent research and consulting firms
This approach facilitates coordination across the enterprise, helps ensure decisions are consistent with organizational objectives and across all units, makes organizational change easier and avoids duplication of activities.
Centralized decision making
purpose to rehabilitate a business as a going concern or reorganize an individual's finances through a court approved reorganization plan; avail to both buiness and consumer debtors
Chapter 11 bankruptcy
Communication that is motivated by a desire for profit and is regulated by the government is called ______.
Commercial speech
A Financial PR professional can be accused of insider trading or releasing information prematurely if they don't follow this ideal
Extraordinary discretion
Regulation Fair Disclosure (adopted in 2000), requires that all publicly traded companies disclose material information to all investors at the same time. However, public relations professionals may offer the material information exclusively to financial reporters whom they have established relationships with and can trust.
False
SEC Form 8-K Commonly called the "annual report," Form 10-K offers a detailed picture of a company's operations, the risks the organization faces and financial results for the fiscal year. The report includes analysis by company management of the business results and what is driving them.
False - SEC Form 10K
The Sarbanes-Oxley Act passed in 2006 and covers corporate auditing accountability, responsibility and transparency
False - passed in 2002
Managers commonly use three financial statements to track the status of business operations: Balance sheets, W-2's, and Income statements
False - they use balance sheets, income statements, and cash flow statements
The Securities Act of 1933 created the SEC (Security Exchange Commission)
False, The Securities Exhange Act of 1934 created the SEC to enforce the newly passed security laws, to promote stability in the markets, and to protect investors
The Securities Act does not require companies to register its stock with the SEC
False, the Securities Act does require copmanies to register its stock with the SEC and to provide detailed info about its financial history and prespects.
When you borrow money to buy a car, the lender is an unsecured creditor
False, they are a secured lender; they get to reclaim the car if you stop making payments
The ______ was established in 1914 to protect businesses from one another.
Federal Trade Commission
Publicly traded companies such as General Motors of privately owned companies such as Dell that do business to make money for shareholders or owners
For profit companies
Financial PR professions have access to what information
Highly confidential and time-sensitive information that requires extraordinary discretion
When should a company utilize a Quiet Period?
In the interval between when a company registers a public offering of securities (stocks or bonds) with the SEC and the time the SEC declares the registration effective. At that point the company can offer the securities for sale. During Quiet Period, a company generally can't issue any information that might affect the stock price or be perceived as "front-running" the stock offering.
A summary of how a business generates income and expenses through both operating and non-operating activities; also known as the profit-and-loss statement or P&L.
Income statement
P&L is another name for this financial document that is a summary of how a business generates income and expenses through both operating and non-operating activities.
Income statement
While states may differ in specific requirements for bringing a libel suit, a 1964 landmark U.S. Supreme Court decision, New York Times v.Sullivan, there are several key elements that are the same nationwide. Which key elements are included in standards of proof for a libel case?
Must contain an element of fault Identification Publication Defamation
Would a part-time, newly hired employee be able to take part in the disclosure of investor/stockholder information?
No. In order to be a part of the dislosure process, the person must be a senior official of a corporation
Would a company be able to buy security before the security is regiester through the SEC?
No. The Securities Act requires a security to be registered before another company could buy or sell it.
Organizations such as credit unions, mutual insureance companies and farm cooperatives that may generate revenue surpluses but are not designed to earn money for owners or members
Not for profit companies
Non profit companies
Organizations such as certain hospitals, public radio stations, most colleges and universities, and charities that don't do business to make a profit for owners
If you need to register your organization as a foreign agent what Act do you reference and what does this require?
Registration of Foreign Agents Act of 1938 requires public relations professionals who represent a foreign government to register with the U.S. State Department. Anyone who acts in the United States as an agent of a foreign government without proper registration can suffer stiff penalties. This law grew out of practices by Carl Byoir and Associates in the 1930s on behalf of Nazi Germany and changed how public relations was practiced.
or sell stock. Consequently, a company can't share material news with just a limited audience (such as selected reporters); rather, the company must disclose that information in ways that ensure everyone has equal access at the same time"
Regulation Fair Disclosure
A single, well-publicized, and strongly enforced accreditation program backed by strong ethics codes is a significant advance toward professional status. A 2010 study found that compared to non-APRs, accredited public relations practitioners were which of the following below?
Report to higher levels in the organization Earn higher annual salaries Have higher education levels Have more years of professional experience
corporations in which members of the public own shares must continuously provide information that affects the understanding of stockholders and investors about the financial positions and propectus of a company
SEC's integrated disclosure system
1934 Act that regulates trading of securities after their initial distribution and requires periodic reporting about a company
Securities Exchange Act of 1934
During which era of PR were journalists hired as "interpreters" to get the news out?
Seedbed era
A 1963 SEC study of the securities market defined insider trading, material information and violations of each. Rules against insider trading encourage timely disclosure of material information in a further attempt to level the playing field between small and large investors
TRUE
A cash flow statement is a report of how changes in balance-sheet accounts and income affect cash and cash equivalents (cash in and out). The report breaks the analysis down by operating, investing and financing activities. Cash flow may be positive or negative.
TRUE
Business literacy includes knowing the legal, political, and regulatory environment in which the organization operates and trends in employee, customer, shareholder, and community relations
TRUE
Centralized decision making is a top-down management method that can create distance from market and customer needs as well as hamper customization required in regional markets.
TRUE
Financial public relations is consideered one of the most demand and least forgiving jobs in an organization
TRUE
Investor relations is sometimes referred to as "financial public relations"
TRUE
The internet is like a traditional public forum. It is the most participatory form of mass spech yet and deserves the highest protection from government intrusion.
TRUE
The 2000 Act that requires public schools and libraries that receive some federal money for internet use to install "technology prevention measures," meaning filters, on computers used by those aged 17 or younger to block innapropriate material.
The Children's Internet Protection Act (CIPA)
To be business literate means to be
Understanding exactly how various organizations make money and what differentiates our organization from its competition
An increasingly anxious sometimes even hostile group of shareholders that need to be persuaded to ride out an economic slump with the company
The dissatisfied investor class
If research you conduct at the end of your program fails to show positive program impact, how could you interpret that data?
The theory behind your program was faulty The theory was correct but the implementation was flawed Your program was actually successful, but your evaluation methods were inaccurate
Decentralized organizations
This "horizontal" or "flat" approach promotes flexibility and market responsiveness, increases control over specific markets or products, creates a greater sense of autonomy within operating units and broadens a sense of accountability and ownership.
A Financial PR Managers uses SEC Form 8-K, what does this mean?
This SEC form provides current information about a corporation so investors can make informed buying decisions. Companies must file Form 8-Ks within four business days of corporate actions that would materially affect stock prices. Information is "material" whenever a reasonable investor would consider the news important in making an investment decision. Issuing a news release and then filing that news release on a Form 8-K is an appropriate way to make a fair disclosure.
If your company breaks Rule 10 b-5 of SEC 1934, what matter does this concern?
This concerns fraud in disclosure. An organization has the legal responsibility to ensure the information it releases is both accurate and complete. This standard applies to all publications, including speeches, releases and all published materials.
If you need to enact Rule 5c of the Security Act of 1933, what business aspect would this deal with?
This is the Act that deals with the registration of securities and led to the embargo of publicity materials during a specific timeframe — frequently called "gag period" — because these materials could be construed as an effort to sell a new security.
If you become a lobbyist, what are your main responsibilites?
This person must report the amount of money he or she received during the previous quarter for lobbying activities. The lobbyist must name publications in which he or she has had an article or editorial published on behalf of the person or organization for which he or she is lobbying. This requirement does not apply to newspapers in the regular course of business. Cases indicate that this act applies only if a person is aiding in the passage or defeat of legislation, which public relations practitioners often do. Legal statutes for lobbying state lawmakers vary by state.
In businesses that are integrated horizontally, it's not unusual to see a variety of similar or related products being sold by a single entity. For example, Pepperidge Farms sells a wide variety of cookies, but also sells breads, cakes and crackers.
True
Bankruptcies can be voluntary or involuntary.
True.
of 1947 govern labor relations management. These laws prevent organizations, including unions, from contributing to any political campaign or candidate and prohibit any candidate from accepting such contributions"
True.
If the CEO asks you, the financial PR manager , to speak on their compensation and perks. Are you allowed to?
Yes
Chapter 13 bankruptcy
allows unsecured creditors to recover part or all of what they are owed.
net income
bottom line and benchmark for companies performance over time; it's what they are required to report to the SEC in accordance with generally accepted accounting priciples and gives a standard reporting format that brings consistency to our news report
Chapter 15 bankruptcy
deals with foreign bankruptcies; a ways for companies with US assets that are organized nominally or headquartered overseas to file bankruptcy in that foreign jurisdiction and in the US as well
Included in APNewsNow
full name of buyer, explain the terms, value of the deal, provide a reason why, are there job cuts, earnings dilution, stock price history, where companies are headquarterd, premarket trade, premium and hostile bid
How should businesses be integrated?
horizontally or vertically
If one of the companies stock is being used at the currency, is it a merger or a takeover?
if a companies stock is being used, the it is usually the acquirer aka a takover