An article titled "FERF [Financial Executives Research Foundation] @65-Financial Reporting's Eternal Quest: What Do Users Want/Need?" by William Sinnett and Roland Laing, which appeared in the December 2009 issue of Financial Executive, discussed the decades-long debate about the constant pressure from shareholders of U.S. companies to report more and more financial information, including publishing earnings forecasts. As far back as 1972, the Securities Exchange Commission said it was reconsidering its longstanding opposition to the publication of forward-looking statements. By 2003, some 84 percent of partners in the international accounting and consulting firm Deloitte said that they had clients who published financial forecasts. In the following years, two reports co-authored by Robert J. Kueppers, a senior Deloitte executive determined that there was no conclusion as to whether companies should release any forward-looking information. The second report, released in 2009, recommended that corporations weigh the risks and benefits of releasing specific financial forecasts. "And, as an alternative to forward-looking earnings targets, a company may favour providing robust historical information on a more real-time basis and allow investors and analysts to make their own predictions," Sinnett and Laing said of the 2009 report.
Instructions
(a) What are the risks and benefits of providing forward-looking information?
(b) What is the purpose of the safe harbour rule?
(c) Why might providing more "robust historical information on a more real-time basis" assist analysts and other users to make their own forecast?