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Construction machinery city, Xingyang Zone, Zhengzhou, Henan, China

Something fishy with company earnings?


Something fishy with company earnings? The Wall Street Journal examined daily changes in analysts' estimates for S&P 500 companies, starting in early 2013, and compared them to what those companies ultimately reported. "Nearly 2,000 times from the start of 2013 through this year’s first quarter," the Journal found, "Companies would have missed the average earnings estimate if analysts hadn’t changed their numbers in the 40 trading days before the company’s quarterly earnings report." For about a quarter of companies, estimates fell enough that they ended up meeting or beating expectations. Expedia and IAC chairman Barry Diller acknowledged that analysts and investor relations executives work together to keep estimates low — “It is a rigged race."