Some 55% of U.S. companies provided earnings and financial guidance to the market in 2004, down from 72% in 2003 ,according a Greenwich Associates survey of CFOs, treasurers and other corporate finance executives at 385 large corporations.
Wall Street is also scaling back its research coverage, the respondents report in the survey. Twenty-two percent of U.S. companies said the number of sell-side analysts covering them fell last year. That result, while less than the nearly 30% that reported a cutback in 2003, shows the sell-side pullback is continuing.
"These (research) reductions are the end result of an ongoing assessment by the securities firms of how the provision of analyst coverage impacts profitability," John Feng, Greenwich principal, saidin a statement.
"Telecommunications and pharmaceutical companies appear to be hardest hit in 2004, with 45% of pharmaceuticals and 43% of telecoms reporting coverage reductions," according to the Greenwich statement.
The data suggest the current regulatory environment, including Sarbanes-Oxley requirements, "has heightened sensitivity to the possible consequences of releasing information that is misleading, advantageous to a particular group that gets it first, or simply wrong," John G. Colon, Greenwich managing director, said in the statement. "While that might not be a bad outcome from an enforcement perspective, it seems counterproductive if the regulatory environment is indeed driving down the frequency of forward-looking communications and forecasting."
The decline in such communication "is relatively consistent across companies of various credit rating and size, although a slightly higher percentage of Fortune 300 companies (60%) are offering earnings and financial guidance," the statement said.