Warren Buffett and Jamie Dimon have teamed up to once again call for the end to quarterly earnings guidance by companies.
Dimon, the chairman of the Business Roundtable, said the group of CEOs has thrown its support behind companies backing away from the practice.
Executives often feel pressure to make quarterly forecasts, but “it can often put a company in a position where management from the CEO down feels obligated to deliver earnings and therefore may do things that they wouldn’t otherwise have done,” Dimon said in a rare joint interview with Buffett airing Thursday on CNBC’s Squawk Box.
It is a long-simmering debate but one that has gotten more attention in an era when activist investors are more vocal about pushing companies to deliver on their promises.
Companies forecast sales and profit numbers to Wall Street analysts, who use it to produce research and stock recommendations for investors. Missing “the number” can often result in big, short-term stock moves. Making a forecast, and then hitting the target, are seen as a way to manage expectations and eliminate volatility.