Poor forecasting methods drain investor confidence

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Inaccurate earnings forecasts are among the easiest ways to upset investors and strain top management credibility. But new research says most companies are failing to improve forecast accuracy, often because theyre martyrs to an annual planning cycle and the frequency and fallout from missed earnings targets could get worse as market uncertainties persist through this year.

With markets slowing unexpectedly and borrowing costs uncommonly volatile, CFOs have more reason than usual to about missing their earnings forecasts this year. But even in the calmer days of 2007, many companies were unable to predict their headline performance even one quarter ahead. Many have already learnt that if theres one thing worse than a profit slump, it's a failure to forewarn of it.

Research to be published n...

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