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.
Stablecoins and the GENIUS Act: How New Global Rules Are Reshaping Compliance
Stablecoins Leave the Grey Zone Stablecoins were supposed to be the “boring” part of crypto: digital dollars that just work. Yet for years they have lived in a regulatory no-man’s-land, classified one day as securities, the next as commodities, and sometimes as something regulators had not even named yet. That uncertainty is finally starting to […]
Don’t Overlook the Importance of Business License Management
If you operate a business without the proper license, you risk fines, insurance issues, reputational harm, and even business closure. Even innocent mistakes, like forgetting to renew a license, can have significant consequences, such as losing your lawsuit for payment of services that are unlicensed, which makes it imperative to have business license management procedures […]
Failing to Comply With NJ Rent Control Exemption May Prove Costly
What Developers Need to Know About New Jersey’s Rent Control Exemption Law to Ensure Entitlement to Exemption for Newly Constructed Multi-family Housing. A property owner in Jersey City is facing a $400 million federal class action lawsuit alleging that the landlord did not follow the procedural steps required to be eligible for exemption from local […]
Crypto Securities Law: When Tokens Become Investment Contracts
The application of traditional federal securities laws to crypto assets continues to evolve. In some cases, the Securities and Exchange Commission (SEC) considers tokens and other digital assets to be securities. This makes them subject to federal securities law, including the Securities Act of 1933 and the Securities Exchange Act of 1934. This classification has […]
The Due Diligence Process for NY Condominiums and Cooperatives
While the New York City real estate market can be extremely competitive, moving too quickly often backfires. Before purchasing a condominium or cooperative in New York City, it is important to do you homework. Purchasing property in NYC can involve a dizzying number of legal issues. These include condo and co-op rules, rent restrictions, and […]
Smart Contract Legal Issues: Drafting Agreements for Blockchain
Smart contracts feature a unique blend of legal agreement and technical code. This innovation has the potential to reshape how business is conducted. At the same time, smart contract legal issues around enforceability, jurisdiction, identity, and compliance are common. The legal framework for these self-executing agreements is still evolving. What Are Smart Contracts? Smart contracts, […]
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!
