Profit warning

from Wikipedia, the free encyclopedia

Under a profit warning ( english profit warning ) is understood in the Securities Law , the warning of a listed company in relation to the public before a lower than expected precipitating profit , reduced profit forecast or a loss worsened prognosis.

General

The neologism profit warning is a loan translation from the English language “profit warning”. The profit warning of an issuer (company) is preceded by its profit or loss forecast, for example in the management report or the interim report . With a profit or loss forecast (profit or loss expectation), the issuer provides an estimate of the development of the future earnings situation . If the current earnings situation deviates negatively from this forecast , the issuer must issue a profit warning to its shareholders . The profit warning is intended to prevent the management board , supervisory board or any other insider of the issuer from exploiting this information in its favor while the public remains uninformed. The insiders could sell their shares at a higher market price as long as the profit warning has not yet affected the price due to lack of publication . Profit warnings usually lead to price declines.

Legal issues

Profit warnings are legally part of insider trading and are intended to prevent insider trading . Insider trading is suspected if there are noticeable price drops shortly before surprising profit warnings. Such a suspicion existed for example at SAP (June 1999), EM.TV AG (February 2000), MB Software (July 2001) or Debitel / MobilCom (June 2002). A profit warning must be issued immediately as ad hoc publicity if an issuer can foresee that it will not be able to achieve its profit forecasts. The profit warning must be published immediately in accordance with Section 26 (1) WpHG and must be sent to the company register ( Section 8a HGB ) for storage. The violation of this is an administrative offense in accordance with Section 120 (1) WpHG . Since the issuer is the addressee of this regulation and the board of directors responsible for the omission of the profit warning is the legal representative of the issuer, the obligation from § 26 of the WpHG can be transferred to the board of directors in accordance with § 8 OWiG .

Unword

The euphemism “profit warning” was on the list for the Unword of the Year in 2001 (ultimately “ God's Warrior ” was chosen ). In the opinion of the jury, it is “a factually incorrect term used by shareholders that warns of lower profits than expected”. More relevant expressions could have been found, such as "profit reduction warning" or, if the company slips into the red, "loss warning".

At the same time, “Profit Warning” was voted the first stock market bad word of the year and in 2008 the Austrian bad word of the year .

“Due to the worldwide economic difficulties, this word has become very topical and is increasingly used. In addition, it is interesting from a linguistic point of view, since it apparently warns of profits, but actually means losses or reduced profits. It is thus a word that obscures the true facts to the greatest extent and thus stands both in content and in its use for those opaque processes that are currently going on in the financial and banking world. "

International

In Switzerland, profit warning is the "correction of an earlier forecast by the issuer with regard to the business result ... if the forecast aroused expectations in the market and the actual result will (probably) deviate significantly from it". According to Art. 53 Paragraph 2 of the Listing Rules (LR), the ad hoc announcement must be published immediately after the company concerned has received reliable knowledge of the fact that is subject to publication. According to Art. 53, Paragraph 1 LR, facts are considered to be price-relevant if they are likely to lead to a significant change in the price. A 10% deviation from the price is considered price-relevant. For the Swiss Federal Supreme Court (SBG) the fact of the profit warning does not constitute an offense of insider offense within the meaning of Art. 161 no. 3 StGB , unless the profit slump is such that the company concerned becomes a restructuring case.

In Austria , the profit warning is an ad hoc announcement sent by the company to the investors, according to which the profit will be lower or the loss greater than previously forecast. According to Section 119 (4) of the Stock Exchange Act, all issuers, credit institutions, insurance and reinsurance companies and pension funds must inform their employees of the prohibition on the misuse of inside information (Article 7 of the Market Abuse Ordinance ), issue internal guidelines for the disclosure of information within the company, monitor compliance with them and adopt appropriate ones Take organizational measures to prevent the improper use or disclosure of inside information.

In the United States advance notice should ( English preannouncements ) of issuers on preliminary earnings figures for the market participants to prepare for expected results. You can more or less than the expectations of analysts are hot and profit warnings ( English profit warnings ) used as a last resort the earnings forecast ( english earnings guidance ) is considered.

Web links

Wiktionary: Profit warning  - explanations of meanings, word origins, synonyms, translations

literature

Individual evidence

  1. ^ Die Gesellschaft, Der Sprachdienst , Volume 45, 2001, p. 92
  2. Franz-Josef Buskamp, Mental exchange expertise , 2005, p 215
  3. Thomas Dittmar, Internal Markets in Banks , 2001, p. 20
  4. Martin Höpner, Who Controls Companies? , 2003, p. 73
  5. Handelsblatt of October 26, 2000, p. 20; Handelsblatt from 8./9. December 2000, p. 14
  6. ^ Matthias von Arnim, Successful with Shares , 2007, p. 69
  7. a b The previously chosen non-words. Archived from the original on August 30, 2009 ; Retrieved December 7, 2009 .
  8. Unworts from 2000 to 2009. In: unwortdesjahres.net. Technical University of Darmstadt, accessed on March 23, 2016 .
  9. "America first" is stock exchange foreboding of the year 2018. Düsseldorf Stock Exchange, accessed on January 27, 2019 : "Previous stock exchange forbidden words:"
  10. a b Austrian UN word 2008. University of Graz, archived from the original on October 25, 2009 ; Retrieved December 7, 2009 .
  11. Ernst & Young, Overview of Stock Exchange Law Compliance , June 2013, p. 8
  12. SBG, judgment of April 15, 2002, Az .: 2A.567 / 2001
  13. ^ Daniel Wichels, Design of Capital Market Communication with Financial Analysts , 2002, p. 125