London European companies should improve the guidance they give on their expected future performance, a survey found.
Research conducted by Smithfield, a specialist fin-ancial communications consultancy, showed that of the top 200 companies in Europe, only 77, or less than 40 per cent, have issued specific guidance for 2012.
The survey, which took the views of 140 investment analysts and business journalists — the main audience to which guidance is directed — reveals that 94 per cent of respondents were in favour of more guidance by companies.
Over the last ten years, corporate guidance to the investment market has steadily increased in sophistication, the survey said.
At the start of 2011, many companies predicted a more positive environment, the survey added, but as the year progressed, and macro-economic uncertainties grew, this view had to be regularly revised downwards.
"The fact that these revisions were often accompanied by share price reactions disproportionate to the impact on forecasts and valuations, reinforced the corporate view that specific guidance was simply a hostage to fortune and companies were better off not giving a view at all," the survey found.
Scott Fulton, director of investor relations at Smithfield, said: "We believe that companies should abandon attempts to offer outright predictions of financial performance.
"Instead, management should articulate its expectations for those factors within its control and highlight sensitivities to those that are not."
