Reporting; Sarbanes-Oxley effect: caution on guidance.The Sarbanes-Oxley Act's impact on corporate fraud--largely the trigger for the 2002 law--is examined in a feature article in this issue. But the Act is apparently having another effect, this on corporate reporting: it is making companies more conservative. Two of three companies on Standard & Poor's 500 roster have exceeded analysts' per-share expectations consistently since the first quarter of 2004, suggesting companies are extremely conservative in their earnings guidance to analysts and then over-deliver on results. So finds a study by Parson PARSON, eccl. law. One who has full possession of all the rights of a parochial church. 2. He is so called because by his person the church, which is an invisible body, is represented: in England he is himself a body corporate it order to protect and defend the Consulting, a financial consultancy, of earnings-per-share projections and actual earnings results. Nearly one in four S & P 500 companies have beaten analysts' expectations by more than 10 percent in this period, the Parson survey found. [ILLUSTRATION OMITTED] The rising percentage of wide-margin misses on the positive side--to 26.1 percent in the second quarter of 2005 from 20.6 percent in the year-ago third quarter--raises the question of whether companies are building padding Bits or characters that fill up unused portions of a data structure, such as a field, packet or frame. Typically, padding is done at the end of the structure to fill it up with data, with the padding usually consisting of 1 bits, blank characters or null characters. See null and bit stuffing. into their financial systems to exceed expectations consistently, Parson said. The study found that the percentage of companies that actually meet earnings expectations has fallen for four consecutive quarters, to just 13.3 percent in the second quarter of 2005 from 16.8 percent a year earlier. The percentage of companies that have missed their projected earnings per share by more than 10 percent on the downside On the Downside is an EP by the San Diego, California band Counterfit, released by Alphabet Records in 2000. It was the band's first EP, recorded shortly after the members had relocated to San Diego from Fairfield County, Connecticut. averages about 7.4 percent, with 8 percent missing the mark in the second quarter of 2005. Parson's research also indicates that few companies employ a sound business performance management (BPM (Business Process Management) A structured approach that models an enterprise's human and machine tasks and the interactions between them as processes. BPM software provides users with a dashboard interface that offers a high-level view of the operation that typically ) system that could more accurately evaluate their overall business processes and ensure data integrity. This becomes more evident as recent regulations have shortened short·en v. short·ened, short·en·ing, short·ens v.tr. 1. To make short or shorter. 2. the timeframe in which companies must report their quarterly and annual earnings to the SEC, while demanding transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. and accuracy of financial information. These requirements should lead companies to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. their processes and employ more sophisticated financial systems that improve accuracy of forecasts. |
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