Continuous Guidance Offers US an Escape From the Quarterly Grind

Twice this week, a big German company has front-run its scheduled quarterly earnings call and unexpectedly released preliminary revenue and profits information early. First Volkswagen pleasantly surprised its investors with news that better than anticipated car sales meant first-half profits would be “significantly higher than expectations”. But airline Lufthansa chimed in with worse news, warning that terror attacks in Europe had hit bookings and lowering its forecast to predict that full-year earnings would fall for 2016. Such “preannouncements” are common in Germany, where the regulator has long insisted that companies must update investors within a few hours if something important has changed. The practice is now likely to spread across Europe because the EU market abuse regulation that came in July 3 has standardised and in some cases tightened the disclosure rules across the 28-nation bloc.

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