Dollars and Jens
Thursday, May 17, 2007
Earnings Guidance
According to BusinessWeek, fewer companies these days are giving earnings guidance. I think earnings guidance may well encourage management to play games, as the article suggests, but the more important question is whether it constitutes information. It usually doesn't; generally, a company should be able to provide enough information that a competent analyst can not only generate his or her own earnings estimates, but error bars and an understanding of what might cause the numbers to miss the estimates.

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