Analysis shows that while forward-looking disclosures by domestic listed companies have declined for nearly two decades, their value as information that moves stock prices remains intact. This is because investors react distinctly to forward-looking disclosures, with stock prices rising when forecasts exceed market expectations and falling when they fall short.
Research fellow Lee Ha-yoon of the Korea Capital Market Institute (KCMI) released a report on the topic of "Current Status, Characteristics, and Information Value of Forward-Looking Disclosures" at the '2026 KCMI Issue Briefing' at the KCMI in Seoul Yeouido, Friday.
Lee suggested that "to encourage companies to actively disclose future performance, safe harbor standards must be clarified."
Forward-looking disclosure is a system in which management voluntarily provides investors with predicted future performance based on internal company information. Unlike regular financial disclosures that convey already realized past results, it informs about upcoming business plans, revenue, operating profit, and so on. The term "guidance," commonly heard in overseas companies' earnings releases, is used with a meaning similar to forward-looking disclosure.
Lee explained that investors react more sensitively to future performance than to past results. She cited NVIDIA's first-quarter 2023 earnings release as a representative example.
At the time, NVIDIA announced that its first-quarter revenue had decreased by 13% year-on-year. However, it projected second-quarter revenue to reach $11 billion. This figure exceeded market expectations by 53.8%. Despite the revenue decline, the stock price surged by 24%.
Lee said, "It presented changes in future business environments that are difficult to discern from past results alone with specific figures. Forward-looking disclosures adjust existing market expectations and mitigate uncertainty."
Conversely, she diagnosed that the use of forward-looking disclosures by domestic listed companies has been suppressed for a long period. According to a comprehensive survey conducted by Lee of 5,796 forward-looking disclosures from 2002 to 2025, the proportion of companies making forward-looking disclosures last year was only about 7% in the Korea Exchange (KOSPI) market and about 1% in the KOSDAQ market. This is a significant decrease compared to 21% in 2008 and 20% in 2006, respectively.
Assessments indicate that improvements are needed not only in the quantity but also in the quality of forward-looking disclosures. Ninety-eight percent of all forecasts used the "point estimate" method, which presents future performance as a single figure.
The "range estimate" method, which presents a certain range to reflect future uncertainty, accounted for only 2%. In the United States, 74% of revenue forecasts and 85% of earnings per share (EPS) forecasts are provided using the range estimate method.
Nevertheless, Lee's analysis suggests that the information value of forward-looking disclosures remains valid. The average daily stock price fluctuation from the day before a forward-looking disclosure announcement to the following day showed an increase of 0.799% when the forecast exceeded market expectations and a decrease of 0.429% when it fell short.
Lee said, "The fact that the market reacts differently depending on the content of the forecasts suggests that forward-looking disclosure content is being utilized in investor decision-making."
As a policy task to activate forward-looking disclosures, he highlighted clarifying the application criteria and scope of the safe harbor system. The intent is to allow companies to anticipate standards under which they can be exempted from liability if they have diligently prepared forecasts based on reasonable grounds, even if actual results differ.
She also proposed that disclosures correcting forecasts due to changes in the business environment should be established as a normal information update process, and the use of the range estimate method should be encouraged.
Lee said, "It is necessary to focus on encouraging companies' voluntary provision of future information while simultaneously strengthening the quality of information and investor protection. Companies must also improve disclosure practices by enhancing the consistency, comparability, and reliability of forward-looking disclosures so that investors can accurately assess a company's future performance and uncertainty."
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