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.
Photo courtesy of Christian Fregnan (Unsplash.com)
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.
Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate
The Fort Monmouth redevelopment has entered its execution phase, and it is repositioning the broader Monmouth County real estate market. When Netflix and the Fort Monmouth Economic Revitalization Authority closed on the 292-acre Mega Parcel in December 2025, the transaction did more than hand over a deed. It marked the moment Fort Monmouth stopped being […]
Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand
Owning a residential rental property in New Jersey involves more than finding tenants and collecting rent. Property owners must comply with a combination of state laws, municipal ordinances, building and housing codes, and zoning and land use regulations. These requirements can affect everything from the number of dwelling units permitted at a property to whether […]
Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them
The five most common real estate disputes are breach of contract claims, landlord-tenant conflicts, zoning and land use disagreements, construction claims, and boundary disputes. Understanding why each arises, and taking preventive steps early, can help property owners, tenants, developers, and investors avoid costly litigation. Key Takeaways: Real estate transactions are complex endeavors involving numerous parties […]
When a Child Turns 18: The Gap in Your Family’s Estate Plan
Once a child turns 18, parents lose the automatic legal authority to make medical and financial decisions on their behalf, even if the child still lives at home or remains on the family’s insurance. Three documents close that gap: a durable power of attorney, a health care proxy or directive, and a HIPAA authorization. For […]
Business Mediation: An Overview and Practical Tips
Business mediation is a confidential, voluntary process in which a neutral third party helps companies negotiate a resolution to a commercial dispute without going to trial. Because working with a mediator is very different from litigating in the courtroom, it is important to understand how commercial mediation works, when it makes sense for your dispute, […]
Top 5 Causes Leading to Construction Defect Litigation
The five most common causes of construction defect litigation are design defects, substandard materials, workmanship defects, code violations, and subsurface defects. Because these flaws can compromise a building’s integrity, functionality, or safety, they frequently lead to disputes involving multiple parties and high financial stakes. Key takeaways: What is Construction Defect Litigation? Construction litigation is complex, […]
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.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
