They told companies to move away from providing quarterly guidance.
Dimon said companies might forego investments they should make in their business, such as marketing, hiring or research, in order to hit short-term goals. At JPMorgan's investor day in February, he called on companies to stop providing the guidance, saying earnings are hard to predict and companies have an incentive to fudge numbers. JPMorgan Chase reported lower fourth-quarter earnings January 12, 2018 on weak trading revenues and one-time costs from United States tax reform, partly offset by gains from higher interest rates.Net income for the quarter ending December 31 was $4.2 billion, down 37 percent from the year-ago period.
A less compelling argument is that corporate EPS guidance more or less anchors analysts' EPS estimates. CEO Jamie Dimon appealed for radical changes to the way public companies disclose financial information.
Short-term-oriented capital markets have discouraged companies with a longer-term view from going public at all, depriving the economy of innovation and opportunity, the said.
Warren Buffett and business friend Jamie Dimon argued Thursday that publicly traded businesses can damage their long-term growth and hurt their shareholders by forecasting their earnings every three months and then making short-term decisions to "make the number". "Public guidance was the fix for many companies".
Earnings guidance can lead management teams to under-invest in the future and can crimp earnings growth, according to a 2017 FCLTGlobal report.
"I have seen managements. get tempted by the predictions that they've made", Buffett said.
Although we've seen no immediate opposition to the proposed elimination of quarterly EPS guidance, it's not hard to imagine what at least one argument might be: just because companies don't publish the number does not mean they won't calculate such a number.
Dimon said Thursday that about 20 percent of Business Roundtable members still do quarterly guidance and about 60 percent provide annual targets.