Still, the practice of giving any kind of earnings guidance had been increasing in recent years despite business advocates' hopes, such as the U.S. Chamber of Commerce, that companies would band together to stop investors' expectation for on short-term guidance. However, the companies that do stop the practice risk letting outside analysts do the predictions for them and feeling pressure to meet those targets or having to explain every three months why they haven't met them.
The practice of predicting quarterly guidance became commonplace in the mid-1990s, following the passage of the Private Securities Litigation Reform Act, which offers companies certain liability protections when stating projected performance.
Reader Comments» Post a comment