A number of major companies, including Berkshire Hathaway, Citigroup, Ford Motor, and Google, have chosen not to issue frequent earnings guidance to investors. Nonetheless, the vast majority of executives responding to the latest McKinsey Quarterly survey1 whose companies issue guidance—some 83 percent of them—say that their companies have no current plans to alter their approach. Yet the executives disagree about the benefits and costs of issuing guidance, the greatest sources of pressure to provide it, and the possible effects of curtailing or discontinuing it.
The survey findings suggest that most executives continue to issue earnings guidance—the comments management provides about how a company will perform in the future—in the absence of any clear consensus on its contribution to company value and largely at the insistence of brokerage house analysts.2
Detailed responses to the survey appear on the following pages.
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