If you are the CEO and you know that your earnings are way below Wall Street estimates, how and when would you present the bad news?
Are you concerned that operating income (EBIT) could be misleading? Should the FASB try to standardize operating income?
If you were a research analyst, would you challenge a CFO on its EBITDAC (C=”Covid”) and other such non-GAAP measures? If so, why?
If you were CFO, how would you handle guidance to Wall Street analysts? Widen the range? Pull it altogether?
How can macro issues, such as the coronavirus, affect the usual relationship between stock prices and earnings announcements that beat expectations?
Have you ever thought about the earnings release date (i.e., the day of the week) as being “corporate body language”? What effect can the choice of the week day have on valuations?
Do you think that a strike would trigger an 8-K filing? Should it? Why or why not? Did it, in this case?
Do you believe the form of a presentation can affect stock prices as much as the substance of a presentation?
If you were a CFO, would you want to move to semiannual reporting? If you were at the SEC, would you? If you were an investor? What are the issues?
Even if the SEC moves to semi-annual reporting (instead of quarterly), do you believe much will change in the overall information environment? Why or why not?
If the tape could be rewound and redone, and if it were your call, how would you have presented the Facebook results and forecast? Do you think it would have made any difference in the stock price?
For revenue recognized over time on long term construction contracts, what are the estimates that firms make? How do these estimates affect when and how much revenue and profit are recognized? Is there any reason why a firm would not want to divulge these estimates, or changes in these estimates?
Stock prices rose and the rise is attributed to earnings. Can you articulate the relation between stock prices and earnings, namely between stock prices and earnings expectations, earnings surprises, future earnings?
If you were a research analysts on an earnings call, would you take part in the groveling? Why exactly? If you were the CFO on the call, would you purposely not take questions from “non-grovelers”?
Why do you think Under Armour’s shares are down 40% from its high, given the growth? What is Wall Street wanting from UA? Do you think UA will be able to deliver? If you were CEO of UA, would you want to “manage” Wall Street’s expectations? If so, how?
So, apparently some firms steer analysts to lower their forecasted earnings, and then these firms announce earnings that, surprise, beat the forecast. Is this a problem that needs to be fixed? If so, how?
Firms who are “heavy users” of non-GAAP (pro forma) earnings measures (“EBBS”) seem to have a higher propensity of accounting problems, resulting in accounting restatements. What might be the connection? If the relation between use of non-GAAP measures and accounting problems is established to be systematic, what do you propose as a solution?
