I respectfully disagree with the notion that doing away with quarterly reporting and forward guidance will lead to better long-term outcomes (“ Guidance is the tyranny, not quarterly earnings”, editorial, August 20).

First, no corporation worthy of investment by institutions or individuals defers capital spending or research and development outlays when management perceives opportunities to profitably address demand from its markets. Aggregate statistics such as the 1.5 per cent reduction cited in the study to which you refer are misleading at best and are of such minor scale as to be irrelevant.

Second, there is ample evidence to support the fact that well managed companies are willing to let their shares take a hit when they have a disappointing short-term outlook to report. Note the second quarter comments by both Facebook and Nvidia as two recent high-profile examples.

The fact is that quarterly reporting of revenues and earnings accompanied by forward guidance yields a transparency that is beneficial to all investors and allows efficient price determination in the equity market. The system “ain’t broke”. It has served investors and companies well. Don’t be steamrollered into an unneeded fix.

Stefan D Abrams
Managing Member,
Bryden-Abrams Investment Management,
New York, NY, US

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