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It is increasingly important for firms to meet or exceed analysts' consensus earnings forecasts. Often management will give guidance or hints of the earnings per share prospects over the next quarter or next year to try to direct the consensus to what is achievable. For example, it is possible that the consensus is well above management's internal forecasts. Management will try to guide the consensus downwards so that when the earnings are released the negative surprise is minimized. Under Regulation FD, management needs to be very careful to provide guidance information to all shareholders -- not just a select group of analysts. This is often achieved in investor presentations (that are often webcast) or conference calls (where anyone is allowed to dial in).
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


An announcement, often over a conference call, by a publicly-traded company of its projected earnings for a quarter or year. Guidance gives investors and analysts a basis from which to make their investment decisions and recommendations. Guidance also helps the company price out any potential good or bad news so its share price is not subject to wild fluctuations when the earnings are actually announced. Guidance is also called earnings guidance.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


Guidance, or earnings guidance, occurs when the executives of a publicly traded corporation estimate projected earnings in an open conference call or Web cast before its quarterly earnings are released.

Goals for providing guidance include underplaying expectations to avoid negative surprises, serving as a counterpoint to stock analysts' consensus estimates, reducing stock price volatility when actual results are announced, and potentially shifting investor focus from short-term results to long-term perspectives.

Corporations also provide guidance to the investing community as a whole because they are prohibited by Securities and Exchange Commission (SEC) Rule FD (for Fair Disclosure) from providing important and previously nonpublic information selectively, as they did before the rule was enacted in 2000.

Those who advocate providing this type of guidance argue that the more information investors have the better. Detractors say guidance doesn't reduce volatility or achieve other goals.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Having a well-implemented, differentiated service-delivery system (i.e., consistent with practices advocated by both comprehensive developmental guidance and the ASCA National Model) was associated with a higher graduation rate in career and technical education programs and with higher participation rates for nontraditional students in career and technical education programs.
Dinkmeyer and Caldwell's seminar work (1970, cited in Green & Keys, 2001), "Developmental Counselling and Guidance: A Comprehensive Approach" provided an early direction for establishing developmental guidance programmes.
The general career goal that is outlined in comprehensive developmental guidance programs for the elementary school student is gaining career awareness (Zunker, 2002).
School counselor time use in Nebraska high schools was found to differ greatly from the pattern recommended by comprehensive developmental guidance (see Gysbers & Henderson, 2000).
Future research should focus on obtaining information from teachers across the nation related to counseling program effectiveness and suggestions on how to optimize collaboration among educational professionals to better promote and implement comprehensive developmental guidance models.
These authors described a variety of multicultural learning games, including "Bafa Bafa" (Shirts, 1977) and "Multicultural Jeopardy." These activities are intended to promote competence in students' attitudes, beliefs, knowledge, and skills, which are all part of a comprehensive developmental guidance program.
Secondly, school counselors view at-risk behaviors from a developmental guidance perspective (Stroufe & Rutter, 1984).
Like the Comprehensive Developmental Guidance Program (Gysbers & Henderson, 2000) movement begun in the 1970s, it repositions the school counselor away from an ancillary role in helping a few students to an integral role in education.
Needed: A new look at developmental guidance and counseling.
The strategies that were articulated by the school counselors include (a) recognition, (b) relationship building, (c) developmental guidance, (d) visibility, (e) evaluation and needs assessment, (f) program/activity facilitation, and (g) problem-solving techniques.
For example, Bringman and Lee's article in this issue describes a study that examines whether school counselors' perceptions of their effectiveness in delivering developmental guidance lessons vary depending on whether they have had previous experience as a classroom teacher.
In their review of school counseling outcome research, Whiston and Sexton (1998) catalogued studies using the four components of a comprehensive developmental guidance program.

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