Why Earnings Guidance Matters

In an entertaining interview with Andrew Ross Sorkin, IACChairman Barry Diller made an impassioned argument that financial guidance is a useless waste of time and management resources for public companies.

It’s an old argument, usually framed by high-minded concepts on each side: for adherents, guidance holds companies accountable on a regular basis; those against believe that guidance distracts from a focus on long-term value creation.

But that lofty point-counterpoint isn’t the real story. Let’s put aside for the moment the likely frustration Diller and the finance chiefs of some of his Internet businesses must be feeling now as they navigate the future in a socially-distanced world, and instead hone in on why guidance matters. There are three reasons, which we’ll call the “three Vs.

Source: CFO (2020)

Share on facebook
Share on Facebook
Share on linkedin
Share on LinkedIn