Many companies provide “corporate guidance” to investors and other interested parties.
Guidance refers to what management expects the company to do in the future. Essentially, it is the practice of predicting business expectations in order for investors to evaluate the company’s earnings potential.
You may recall a similar practice referred to as the “whisper number.” Guidance is similar, only whisper numbers were limited to being provided to select analysts to allow them to warn their largest clients. The illegality of this practice has been codified in fair disclosure laws, so now it is law that companies must provide guidance to all investors at the same time.
Corporate guidance can play an important role in investors’ decision-making processes and it is the only legal means for providing corporate expectations to the market. Presumably, management is in the best position to predict how the company will perform, so any analyst or investor whould be able to use this information in addition to his/her own research to predict future performance with some accuracy.
The downside to relying upon corporate guidance is management teams are aware of the importance placed on their comments, so they use their guidance as a tool for influencing investors. This can result in guidance being too optimistic or too low, depending on the goals of the company. Thus, it is essential for investors to perform their own due diligence in evaluating the guidance that companies provide.
Corporate guidance should be used as a reference point from which to build your predictions. It plays an important role in the market, but it should not be the only factor relied upon in making investment decisions.
If you have any questions about corporate guidance or would like to discussother corporate, securities and investment banking matters, please contact me or the Scarinci Hollenbeck attorney with whom you work.
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
The Meaning of “Corporate Guidance”
Author: Dan Brecher
Many companies provide “corporate guidance” to investors and other interested parties.
Guidance refers to what management expects the company to do in the future. Essentially, it is the practice of predicting business expectations in order for investors to evaluate the company’s earnings potential.
You may recall a similar practice referred to as the “whisper number.” Guidance is similar, only whisper numbers were limited to being provided to select analysts to allow them to warn their largest clients. The illegality of this practice has been codified in fair disclosure laws, so now it is law that companies must provide guidance to all investors at the same time.
Corporate guidance can play an important role in investors’ decision-making processes and it is the only legal means for providing corporate expectations to the market. Presumably, management is in the best position to predict how the company will perform, so any analyst or investor whould be able to use this information in addition to his/her own research to predict future performance with some accuracy.
The downside to relying upon corporate guidance is management teams are aware of the importance placed on their comments, so they use their guidance as a tool for influencing investors. This can result in guidance being too optimistic or too low, depending on the goals of the company. Thus, it is essential for investors to perform their own due diligence in evaluating the guidance that companies provide.
Corporate guidance should be used as a reference point from which to build your predictions. It plays an important role in the market, but it should not be the only factor relied upon in making investment decisions.
If you have any questions about corporate guidance or would like to discussother corporate, securities and investment banking matters, please contact me or the Scarinci Hollenbeck attorney with whom you work.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
