In my former days on the carrier side, our D&O insurance group advocated for our policyholders a program of securities litigation loss prevention, on the theory that there are steps companies can take to make themselves less likely to be a securities suit target or better able to defend themselves if they are hit with
Earnings Guidance
Earnings Guidance: Contrasting Perspectives
In a recent post (here), I discussed the recent work of two blue-ribbon groups focused on eliminating “short-termism” and recommending, among other things, the elimination of quarterly earnings guidance. The results of the National Investor Relations Institute’s 2007 Earnings Guidance Practices Survey (press release here, survey results here) suggest that more…
Quarterly Earnings Guidance and D & O Risk
As I have noted in prior posts (most recently here), there is a growing chorus of voices calling for the elimination of “short-termism,” and specifically, for the elimination of quarterly earnings guidance. The recently issued reports of two blue-ribbon groups underscore the need for companies to develop and maintain a long-term orientation. More specifically,…
Reports About Earnings Guidance, Securities Litigation Frequency, and The D & O Insurance Marketplace
Eliminate Quarterly Guidance? On July 24, 2006, the CFA Centre for Financial Market Integrity and the Business Roundtable Institute for Corporate Ethics issued a Report entitled "Breaking the Short-Term Cycle: Discussion and Recommendations on How Corporate Leaders, Asset Managers, Investers and Analysts Can Refocus on Long-Term Value," calling on corporate leaders, asset managers and others…
Earnings Guidance: Meet, Beat or Delete?
The classic statement on the pitfalls of providing optimistic earnings guidance appeared in Warren Buffett’s Letter to Shareholders in the 2000 Berkshire Hathaway Annual Report (only an excerpt is reproduced here, but the entire Letter warrants reading, especially in light of subsequent events):
The problem arising from lofty predictions is not just that they spread
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