Caution: Profit warning! serious warning signal or a lot of noise about nothing?

Management forecasts and their adjustments are closely monitored by the capital market. As the present analysis shows, significant share price reactions occur in the course of forecast adjustments.

Investors should therefore pay close attention to management's statements. However, investors should be aware that the management is well aware of the expectations of the capital market and is aligning its forecasting policy accordingly. Management is anxious not to miss these expectations, as this is accompanied by clearly negative stock price reactions.

For investors with a long-term horizon, on the other hand, meeting or failing to meet short-term targets forecast on a quarterly basis is likely to be of minor relevance. For them, it is more important that management has an idea of how the company should be positioned in order to be sustainably successful and whether a credible implementation plan is being pursued.

This study is only available in German.