Congress recently heard testimony from those who want to abolish earnings guidance. This refers to management's practice of telling analysts and others what the company is likely to earn in coming quarters. Critics claim that guidance forces a greater focus on short-run results.
Many companies have already stopped providing guidance. Interestingly, these companies also tend to be the troubled ones. The last thing we need here is government intervention. Regulation FD already requires guidance--as well as all material information--be released to everyone (not just analysts) at the same time. Those who favor the elimination of guidance are really saying that investors are better off having less--not more--information. This is ridiculous. I've written a couple of pieces on this subject for Forbes. The links are below:
In Defense of Earnings Guidance
Tight Lips Sink Stocks
