Earnings Guidance Is Back: Oh No, Oh Yes

Baruch Lev
By Baruch Lev
Around a third of U.S. public companies provided earnings guidance ― managers' forecast of forthcoming earnings ― either quarterly and/or annually pre-pandemic. Roughly half of these companies stopped the guidance in 2020, claiming that the heightened business uncertainty, particularly regarding the return to normal operations, precludes them from providing an earnings forecast. Makes sense. Now, many of the guidance secessionists are returning to the fold and the panic about guidance has resumed.

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Baruch Lev is the Philip Bardes Professor of Accounting and Finance.