Should We Get Rid of Quarterly Earnings Reports?
A macro crisis can make people think, and that's usually a good thing.
More specifically it makes people re-think their assumptions, question conventional wisdom, or finally pay attention to those who've questioned conventional wisdom all along. Take Nobel Prize-winning economist Joseph Stiglitz, who argues against the "too big to fail" strategy that's enabled massive consolidation in banking. Bailout? Stiglitz says break 'em up.
More questioning authority in The Front Burner, a new feature on HarvardBusiness.org that offers quick takes and links to make sense of our current economic disarray. Today, content director Paul Michelman asks what's the point of the quarterly earnings report? "As noted in the Harvard Business Review, quarterly-earnings reports say little about a company's financial
health. Yet this number dominates -- and distorts --executives', analysts', investors', and auditors' decisions," he writes.
Today's a great case in point. Headline on WashingtonPost.com right now: U.S. Stocks Tumble on Poor Earning's Reports. The market is down three percent because of earnings reports that say what we already knew: the economy stinks. Is this uncertainty or madness?
Others who are thinking big:
- Bill Taylor, with advice for leaders who have to manage this mess. (Don't try to be a lone genius; you will fail).
- Tom Davenport, with ideas on how to renovate the economy (Spend less; produce more).
- Tammy Erickson, with thoughts on how Gen Y will emerge from the crisis chocolate-coated (Gen Xers have mortgages and Boomers retirement accounts; Gen Yers have, like, nothing to worry about)
- Umair Haque, with opinions on recession-as-usual strategies being doomed to fail. (The economy will recover; but it will be fundamentally different)
By
Scott Berinato
|
October 22, 2008; 2:50 PM ET
| Category:
Economy Watch
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