Earnings Guidance — a practice in which corporations issue quarterly disclosures to both securities
analysts and the public about the level of earnings that the company expects to
report in the near future. Critics have asserted that doing away with quarterly
earnings guidance will help companies focus on long-term rather than short-term
results, a practice that should ultimately increase shareholder value. Another
argument against issuing earnings guidance is that it often encourages
undesirable executive behavior (e.g., artificially boosting earnings), in an
effort to meet guidance targets, which sometimes leads to claims against
corporate directors and officers. In March 2007, the U.S. Chamber of Commerce
recommended that businesses discontinue the practice of issuing quarterly
earnings guidance.