Corporate watch dogs online: as recent tales of corporate misdeeds emerge.

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Questions about who knew what, how much they knew, and when they knew it make us wonder why alarms did not sound sooner. It seems as if everyone who should have known, or might have known, didn’t know or didn’t say. Or did they? While the various players try to sort out the answers to these questions, it might be worth looking at who watches corporate activity and why. How much corporate watchdog activity can be tracked online? Where are the best places to look?

Corporate observers and watchdogs can be found both within the corporate structure and in many different types of organizations and agencies. Within companies, there are departments and units that control actions and expenditures and demand accountability. These include accounting, law, compliance, and product testing. Closely connected to companies and their concerns are the external accounting firms, law firms, contractors, and consultants who work for and with companies and their employees.


In many industries, where self-regulation plays a prominent role, the effectiveness of industry self-regulation and company accountability to stockholders and employees has long been questionable. As a consequence, there are watchdogs that observe the behavior of those companies that self-regulate. Groups perform watchdog-type functions in the course of addressing their agenda, even though it is not their main focus. Examples of this might be law firms that file class action suits on behalf of employees or consumers, and investor groups that monitor the activities of companies to protect their interests or to further a political agenda through social investing.

Both public and private companies have many outside observers watching them from a variety of vantage points with different degrees of proximity. Unions, professional associations, and trade associations frequently have close and immediate connections to the companies, their management, and their employees. Industry analysts and observers, investor groups, federal and local governments, quasi-governmental agencies, consumer groups, political activists, and the media as well as lawyers, consultants, and research organizations that support these groups can act as corporate watchdogs. These organizations range from nonprofit, nonpartisan consumer groups whose focus is on consumer protection to trade associations’ public relations departments defending an industry in the guise of impartial outside observer.


Observers of corporate activity generally focus on policy, actions, and accountability. Many kinds of corporate accountability exist, although we commonly think of it in terms of accounting and other financial issues. While investors are generally led to believe that there are checks and balances in place that would limit executive behavior in public companies, recent events such as stock fraud, excessive executive compensation, pension looting, financial disclosure and insider trading would suggest that, even in public companies, accountability may be more of an illusion than a reality.

Accountability does not only refer to financial matters–financial actions are not the only types of corporate actions under scrutiny. Other areas of accountability include corporate governance issues. In some industries, self-regulation of company actions and policies results in trade and
professional associations playing prominent roles as industry watchdogs involved in product, pricing, and policy issues. Other issues include, but are not limited to, environmental issues, product safety and efficacy, pricing, employee benefits and working conditions, political contributions, and policies, politics, and political influence both within the United States and globally. Some watchdogs consider business entities within the context of global social and political issues such as child labor, human rights violations, or world trade.


Employee and professional unions often have active watchdog campaigns focused on the issues that most concern their members, such as employee benefits, working conditions, corporate governance, pensions, and executive compensation. An example of a labor union sponsored watchdog site is the AFL-CIO’s Executive Paywatch []. In addition to its well-established executive compensation database, the site offers employees of public companies detailed instructions on how to monitor the business activities of their Board of Directors, pension funds, and auditors. Its “Is Your Company the Next Enron” page offers case studies and step-by-step instructions for workers who want to monitor their company’s activities, and the “Is Your Pension Fund at Risk” page provides detailed instructions for finding information on company pension plans.

Organizations whose primary mission involves some aspect of business or industry may support various oversight or watchdog functions. Similarly, some professional credentials granting organizations protect the interests and reputations of their members by identifying individuals who have lost their licenses or credentials. Many industry and professional associations have watchdog functions. Familiar sources such as Gale’s Encyclopedia of Associations [ or File 114 on Dialog] and the American Society of Associations’ Executive Gateway to Associations Online [] can be used to help locate industrial and professional associations.

Directories of experts or news sources may also list watchdog groups or industry associations whose functions include watchdog activities. A good place to start is Kitty Bennett’s “Sources and Experts,” a list of links to directories of experts as well as other sources and resources for locating experts at the Special Libraries Association News Division’s Web site []. Expert witness databases may prove useful as well.


In the United States, many aspects of business are governed by federal, state, and local regulation and legislation. In addition, there are quasi-governmental agencies that regulate or monitor industries, their policies, and their products. Some of these agencies, in the context of their mission, perform watchdog functions. A basic strategy for finding out which federal, state and local agencies monitor or regulate an industry might include visits to the “Business Gateway” page at Firstgov [] and the Small Business Administration’s site []. There are also agencies that monitor the government’s own interaction with business entities, such as the General Accounting Office and the General Services Administration.

Among the well-known departments and agencies that have industry watchdog functions are the Department of Labor, the Food and Drug Administration, the Federal Communications Commission, the Social Security Administration, Pension Benefit Guaranty Corporation, the National Labor Relations Board, Department of Transportation, the Securities Exchange Commission, the Federal Elections Commission, and the Occupational Safety and Health Administration. Many government agencies have enforcement capabilities. Some of these agencies’ Web sites have facilities for handling individual consumer complaints. Other watchdog agencies act for the benefit of the public, but do not resolve individual consumer problems.


The results of what might appear to be similar government agency watchdog activities, but which are often quite different in focus or in content, may be found among many agencies. For example, product recalls can be found at the Web sites of the Consumer Product Safety Commission, the Environmental Protection Agency, the National Transportation Safety Board, National Highway Traffic Safety Administration, and the Food Safety Inspection Service. A list of where to find product recalls and frauds and helpful links to other aspects of consumer protection can be found at the General Services Administration’s Federal Consumer Information Center [].

Business watchdog activities also take place in connection with federal, state, and local legislative efforts. Recent federal, legislation connected with the ongoing monitoring of political campaign contributions includes the new campaign financing law, the Bipartisan Campaign Reform Act of 2002. This legislation is an effort to prevent unions and corporations from making unregulated ‘soft’ money contributions to political campaigns. Other recent legislation concerns accounting practices. The Sarbanes-Oxley Act of 2002 includes changes in federal securities legislation, oversight of public auditors through an oversight board, and auditor independence rules. It also includes new disclosure requirements for corporate insiders and restrictions on insider loan and stock transactions.


When we believe that our regular channels of information and action fail us, we may seek alternate ways of knowing. It seems logical that organizations and media outlets that monitor corporate misdeeds seem to be more visible lately, in light of recent business news concerning corporate misdeeds. There are groups, most of which are nonprofit, who perform watchdog functions either exclusively or as part of a broader agenda. These groups have missions that often include monitoring social issues or policy and the institutions that create it, education, lobbying, or other forms of activism. They cover the entire political spectrum, from supporting partisan politics to opposing the actions of governing bodies regardless of party, from liberal and conservative agendas, to one-issue-only focused forums. Funding varies from being entirely supported by a parent organization to being funded entirely by individual contributors. Their reliability and bias run the spectrum from credible sites with balanced presentation of issues to individuals with personal gripes against specific industries or companies.

Many activist organizations have active campaigns on issues that concern them. Some of these are focused on particular companies whose practices are under scrutiny. Most nonprofit “outsider” watchdog organizations seek to accomplish their mission through various types of outreach, such as media campaigns, educational programs, lobbying, organizing meetings, boycotting, and other protest activities. For-profit organizations may also be involved in similar activities as well as in promoting social investing, class-action suits and other forms of litigation. Some for-profit and nonprofit organizations which present themselves as watchdogs may be industry organs.


Some of the more prominent watchdog organizations monitor a variety of public policy issues. For example, Common Cause, a non-partisan citizen’s lobbying group, describes itself as a representing “the unified voice of the people against corruption in government and big money special interests” []. In this context, it lobbied for issues such as corporate and union campaign donation reform, energy policy, equitable bankruptcy laws, and corporate tax reform. Common Cause also monitors the activities of some regulatory agencies. Some organizations develop list of offenders and give “awards” to the more egregious ones. For example, CorpWatch [] gives out bimonthly Greenwash awards to corporations “that put more money, time and energy into slick PR campaigns aimed at promoting their eco-friendly images, than they do to actually protecting the environment.”

Other watchdog organizations are focused on consumer issues. Among the more familiar organizations that assist consumers are the Better Business Bureaus that exist throughout the United States []. In addition to education and consumer protection activities, Consumers Union [], publisher of Consumer Reports, tests products and rates performance and quality. It covers food safety, financial services, utilities and telecom services, healthcare, and product safety. Infact [] is a nonprofit organization that lists products that are life-threatening. The Foundation for Taxpayer & Consumer Rights
(FTCR), a California-based, non-profit education and advocacy organization, claims its “job is to fight to protect your interests every day” []. In addition to weightier consumer and insurance issues with which it deals, FTCR has a “junk fax” campaign against unsolicited fax advertising. Considering the serious issues discussed at this site and other the consumer-oriented sites, the campaign is a welcome respite.


If there is an industry, there is a watchdog. For example, the Aviation Consumer Action Project, an organization founded by Ralph Nader in 1971 to monitor the airline industry, focuses on air safety, security, and consumer rights []. Like the aviation industry, many aspects of the funeral industry are regulated by various governmental, and nongovernmental agencies. Abuses in this industry have long received the attention of government and investigative reporters. Alliances within an industry among nonprofit groups are a common occurrence. An example of such an organization is the Funeral Consumers Alliance [].

There are many issues in play related to corporate governance and shareholder rights. Investor groups have corporate watchdogs to focus on questionable governance practices such as interwoven boards or interlocking directorates, cross-serving CEOs, etc. [], an association of large public and corporate pension funds, puts a list of shareholder initiatives, including, in some cases, the text of such initiatives, and a list of company votes on shareholder resolutions since 1999 on its Web site.


Investigative journalists have a long history of monitoring corporate behavior. Judith and William Serrin’s recent book, Muckraking! The Journalism that Changed America, documents watchdog articles dealing with business practices that go back as far at the middle of the 19th century [2]. Traditional media outlets continue to bring questionable corporate practices and misdeeds to light. Advocacy publications as diverse as Consumer Reports, and Mother Jones [] monitor and report on business practices.

There are law firms whose practice areas include environmental law, investor fraud, employee benefits, and consumer fraud. Some of these firms’ Web sites contain informational material related to their practice areas, such as white papers, list of links, and information about recent litigation. An example is the firm Milberg, Weiss Bershad Hynes & Lerach [], which has devoted part of its Web site to Enron. It includes background papers written by partners in the firm, related court documents, and press releases relating to the class-action investors’ suit against Enron []. Law firms involved in current or past litigation in consumer- or employee-related issues sponsor similar sites. These sites may be focused entirely upon one company or more broadly on practice areas and related litigation.

Industry research firms, investment research firms, and independent research analysts watch companies within their industry contexts, in order to make forecasts or to advise investors. Somewhat related to shareholder rights is the concept of social investing, in which investors choose from among stocks of companies whose business practices are aligned with the investor’s political, religious, or social opinions. Some investor groups and investment management companies monitor issues related to such agendas, such as human rights and the environment and, in doing so, have some watchdog-like functions [3].


Organizations that spend considerable efforts monitoring one or more aspects of corporate activity and releasing this information to the public do so for a wide range of reasons. Any organization that monitors and reports corporate activities has an agenda. As with any business resource, it is important to be aware of the agenda and funding of any source on which one relies for information, especially if a particular organization or Web site is the only source of information on a particular issue. Reportorial standards employed by reputable newspapers may not necessarily be the standards by which other reporting organizations operate. A think tank or activist organization does not necessarily concern itself with providing even representation of issues, and it seems unreasonable to expect such measures from them.

Concerns for information quality by the watchdogs themselves vary from unsubstantiated claims about companies and products on gossip sites to the extraordinary measures concerning disclosure taken by others. For example, The Council of Institutional Investors site is arranged so that users cannot access its information until they read a disclaimer stating that it made its best
efforts to be accurate but guarantees none of its information.

Such sites are welcome exceptions. Researchers who use Internet-based resources know how much time is spent in gauging the quality and reliability of the information uncovered in unfamiliar sources. Issues relating to the quality and reliability of the information are pursued in detail in Anne Mintz’s recent book Web of Deception, published by Information Today, which is the publisher of this journal. In addition, many useful guides to evaluating sources can be found in Alaister Smith’s selective list of links on evaluation criteria at the Information Quality World Wide Web Virtual Library [].


Policymaking or advocacy organizations are seldom politically neutral, even when neutrality is their mission and intent. While some sites make no claim to support any point of view but their own, some organizations claim to present unbiased information. Claims are not assurances; even the best efforts of an organization may occasionally miss the mark. What may seem innocuous to one organization may be a major issue for another. For example, a list of links at the Consumers Union, which prides itself on its even-handedness, includes the World Trade Organization under the heading “International Consumer Movement.” The WTO describes itself as “dealing with the rules of trade between nations” [] and promoting equitable trading conditions. In contrast, many organizations consider the WTO to represent global business interests that disregard the interests of the consumer. Much recent consumer activism opposes the WTO’s operations and decisions.

The business media frequently refers to information obtained from watchdog organizations, but less frequently indicates the bias of the organization from which they obtained their information. Unless, of course, the organization’s bias does not match the business publication’s bias. For example, a Business Week Online article criticized Corp Watch, which is not and does not represent itself as a news media site, for not meeting journalistic standards, faulting them for not presenting a balanced view and for not being “a thoughtful corporate watchdog” (4). An article in the May 13, 2002, issue of The Nation notes that The Wall Street Journal editorial page has been attacking Milberg, Weiss Bershad Hynes & Lerach, the law firm mentioned above, which has “successfully pursued scores of investor fraud lawsuits” (5). This article is critical of both the business press and the government for failing their duties. This polite war of words brings to light another problem–do the watchdogs need watching?


Some so-called watchdog groups are extensions of public relations firms or of pro-industry groups. PR Watch, a project of the Center for Media and Democracy [], which monitors the public relations industry; has uncovered several organizations whose watchdog claims are motivated by competitive corporate concerns. Similarly, The Foundation for Taxpayer and Consumer Rights has a section devoted to what it calls the “Goon Squad” or
spokesmen who claim to represent the consumer but who represent corporate interests, instead []., itself a media watchdog, has a list of other watchdog organizations whose focus is the media [].

When not watching and judging each other, both the news media and citizen and trade watchdog organizations are watching the government organizations. As the main focus or as part of their other activities, many watchdog organizations monitor federal, state, and local government agencies whose mission is to protect consumers, employees, pensions, and natural resources or monitor financial institutions, pollution, etc. The government also watches the watchdogs–the Internal Revenue Service demands that all nonprofit organizations file a Form 990 tax return, whose contents are available to the public. If a watchdog organization is nonprofit, it may be worthwhile to check on its finances at the American Institute of Philanthropy [], the BBB Wise Giving Alliance [], or at Charity []. You can also check the GuideStar National Database of Nonprofit Organizations, which includes a database of all IRS-recognized nonprofit organizations [].

As mentioned earlier, some watchdog organizations form alliances with others having similar or related concerns. These connections may aid the user in determining an organization’s bias and credibility. These alliances maybe issue or industry-focused. One of the larger alliances of this sort is The Consumer Federation of America [], which is a consumer advocacy and education organization with 258 member consumer-related organizations.


Watchdog watching has reached the status of urban legend in some cases, hysteria in others. Remember the poor Furby? It was Christmas 1998’s most popular toy. Furbies recorded what you said and played it back. Then they were plagued by watchdog frenzy. First the CIA and NSA banned them from their offices–what if loving spies bought the critters during lunch hour and then brought them back to the office before bringing them home for the kids (6)? Next, rumors spread that Furbies would not be Y2K compliant! Soon their manufacturer was issuing press releases that explained why this was not a concern.

Business conditions, ranging from the dot-com bubble of recent years to the major financial scandals during 2002, have turned this hysteria into watchdog frenzy and Web publishing has turned the frenzy into a plague. Anyone with a Web site and a cause can claim to be a watchdog. So, with a certain sense of irony, it would seem appropriate to conclude by saying that the points of view found at the Web sites mentioned in this article are illustrative, may not be authoritative, and do not necessarily reflect the opinions of the authors.


(1.) Kranz, Matt. “New Board Rules would Still Allow Some Dubious Practices,” USA TODAY, September 2, 2002 [].

(2.) Serrin, Judith and Serrin, William. Muckrakmg! The Journalism that Changed America. New York the New Press. 2002.

(3.) Scherrek, Susan. “Following Your Conscience Is Just a Few Clicks Away,” Business Week, May 13, 2002. pp. 116-117.

(4.) Merritt, Jennifer. “A Corporate Watchdog with Tunnel Vision,” Business Week Online, July 19, 2002 [] .

(5.) Greider, William. “The Enron Nine,” The Nation, May 13, 2002. pp. 18-22.

(6.) “World: Americas. Furby Toy or Furby Spy,” BBC NEWS, January 13, 1999. [http:/].

Roberta Brody [[email protected]] is Associate Professor, Graduate School of Library and Information Studies, Queens College, City University of New York. Ron Barcikowski, Lisa Baruch, Maria Berg, Michel Criscouli, Robin Kessler, Lisa Lin, Carolyn MaGuire, James Ryan, Marjorie Gaba Shapiro, Asha Unni, and Katherine Walkden were students in GSLIS 786: Business Information Sources and Services, taught by Professor Brody.

Comments? E-mail letters to the editor to [email protected].

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