Warren Buffett, Jamie Dimon: Quarterly profit forecasts hurt economy

Jamie Dimon, Warren Buffett urge CEOs to end quarterly earnings forecasts

JPMorgan Chase CEO Jamie Dimon and billionaire investor Warren Buffett are calling on CEOs to move away from issuing quarterly profit "guidance" to Wall Street analysts, arguing that the financial markets' focus on short-term results harms the economy.

"Quarterly earnings guidance often leads to an unhealthy focus on short-term profits at the expense of long-term strategy, growth and sustainability", they said in the op-ed.

Warren Buffett and Jamie Dimon are doubling down on their plea for corporations to stop providing quarterly earnings guidance.

Buffett and Dimon announced they are partnering with Business Roundtable, a group of roughly 200 CEOs of major US companies, to call on companies to consider eliminating quarterly guidance.

Executives often feel pressure to make quarterly forecasts, but "it can often put a company in a position where management from the CEO down feels obligated to deliver earnings and therefore may do things that they wouldn't otherwise have done", Dimon said in a rare joint interview with Buffett airing Thursday on CNBC's Squawk Box .

"When companies get where they're sort of living by so-called 'making the numbers, ' they do a lot of things that really are counter to the long-term interests of the business", Buffett said.

Buffett and Dimon helped produce a set of voluntary governance guidelines two years ago, which was signed by more than one dozen executives.

They said the pressure for companies to meet short-term estimates was hurting the U.S. economy.

"I have seen managements. get tempted by the predictions that they've made", Buffett said. The two business gurus said quarterly financial guidance encourages short-term thinking that stifles growth and limits innovation in the economy.

Quarterly earnings guidance works like this. Last month, he said the goal is to challenge the entire healthcare industry, not individual segments.

Dimon said that Schultz "would be a great chief executive or governor or senator or mayor or whatever he wants to do", but added that he's not sure that managing a business makes a person suitable for politics.

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