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Sarbanes-Oxley skews investors’ expectations

Sarbanes-Oxley skews investors’ expectations

by Rick Turoczy on August 7, 2006

Your confusion over the market is quite understandable. Investment analysis, which might have worked successfully 10 years ago, does not always work today. Strong earnings and revenue growth historically moved stock prices.

But over the past few years, Wall Street investors wanted both good quarterly earnings and revenue growth, and also demanded that corporate management be extremely positive during their quarterly conference calls regarding the earnings outlook for the next quarter. As a result of the Sarbanes-Oxley legislation, corporate executives have become overly cautious about “over-promising and under-delivering.”

Sarbanes-Oxley skews investors’ expectations

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