Shah Gilani
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These Billionaire CEOs Are Still Pushing to "Cancel" Earnings Season
Earlier this month, The Wall Street Journal ran an opinion, co-authored by Jamie Dimon, chair and CEO of JPMorgan Chase & Co., and Warren Buffett, chair of Berkshire Hathaway Inc., titled "Short-Termism Is Harming the Economy."
It made quite a splash, with lots of pundits opining that maybe these guys were onto something.
The truth is Buffett and Dimon's opinion is without merit. Worse, it's dangerous.
The "short-termism" they claim is harming the economy manifests itself in earnings guidance from managers of public companies.
As if CEOs' and CFOs' earnings guidance impacts America's $19.4 trillion economy. It doesn't.
The authors state, "Today, together with Business Roundtable, an association of nearly 200 chief executive officers from major U.S. companies, we are encouraging all public companies to consider moving away from providing quarterly earnings-per-share guidance. In our experience, quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth, and sustainability."
It's a bait-and-switch – they want you to "watch the birdie."
Because what the authors really want to do away with isn't just earnings guidance… It's earnings reporting.
That's not my opinion: That's exactly what they've been advocating.
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