As you know, usually when stocks earnings are released, their stock prices react accordingly, it doesn’t necessarily depend on whether it’s a beat on the numbers or not, but it largely depends on the given guidances for next quarters/next year.
So, how likely it is for companies to manipulate their earnings strictly through given guidances? For example, they leave their actual bad earnings numbers as is to avoid more obvious fraud activities, but to falsely give out vague guidances in hope to avoid a drop or to pump their stock prices? E.g., they know the company is gonna have lower profits for the next year which may cause a massive dump after their earnings is released, but if they somehow announced something like “we expect a recovery soon and we raise our guidance for the next year” instead of saying “we lower our guidance for the next year”, their stock may instead be popping following the guidance. Just wanna know how likely can companies do this type of manipulation, or is it very unlikely to happen since most of their reports would get audited by their auditors such as PWC, Deloitte, etc.? Do earnings guidances get audited too??
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