Olga
Conrad, a financial writer, noted recently, "There are substantial
arguments for including earnings projections in annual reports and the like.
The most compelling is that it would give anyone interested something now
available to only a relatively select few-like large stockholders, creditors,
and attentive bartenders." Identify some arguments against providing
earnings projections.
Arguments against providing earnings projections include:
(a) No one can foretell the future. Therefore forecasts,
while conveying an impression of precision about the future, will
nevertheless inevitably be wrong.
(b) Organizations will not strive to produce results
which are in the shareholders’ best interest, but merely to meet their
published forecasts.
(c) When
forecasts are not met, there will be recriminations and probably legal actions.
(d) Disclosure
of forecasts will be detrimental to organizations because it will fully inform
not only investors but competitors (foreign and domestic).
