Open these pages on any given day and you’ll find news of companies whose earnings fell short of, met or exceeded Wall Street’s expectations. Fall short, and your stock can be hammered. Meet the estimate and it will sit still. Beat it and the price will jump.

How do analysts come up with the profit targets?

They crunch all kinds of data. In many cases, the most important is the quarterly earnings guidance provided by companies themselves – an age-old practice that, according to critics, leads to damaging short-term thinking among corporate executives.

Several years ago, Coca-Cola stopped issuing regular quarterly earnings estimates, and AT&T, Sun Microsystems and PepsiCo followed suit. Coke shareholder Warren Buffett has long disdained the practice.

Back in 1998, former Securities and Exchange Commission Chairman Arthur Levitt warned that earnings guidance leads executives to manipulate results.

Sounds like everyone agrees that earnings guidance is bad.

Well, not everyone. The analysts obviously like this guidance. So do short-term investors, who bet on the ups and downs when actual earnings don’t meet expectations.

Though small investors shouldn’t play this game, short-term speculators do provide a useful service by helping stock prices quickly adjust to new information.

Earnings guidance is like any tool: useful in the right hands; dangerous in the wrong ones.

Defenders argue persuasively that an executive cannot issue misleading numbers indefinitely without ruining his credibility and jeopardizing his job.

Corrupt Enron-era executives did far more than merely issue bad guidance – and banning the practice probably would not have stopped them.

Of course, too many companies do fixate on quarterly results, making their stock more volatile and attracting short-term speculators. Some academic research has shown that companies with lots of “transient” shareholders skimp on needed research and development.

But executives who focus on short-term performance will do so even without quarterly targets. Executive stock options are probably the biggest cause of short-term thinking, and that would persist even if earnings guidance were outlawed.

Moreover, post-Enron reforms required that companies release forward-looking analyses to everyone, not just analysts and favored shareholders. Thus, all investors, large and small, now can judge for themselves whether earnings guidance is credible.

Investors who think earnings guidance is bad can vote with their feet, avoiding stocks in companies that engage in the practice. Ultimately, that would cause more and more companies to give it up.

Indeed, that’s already happening. A study done this year by the consulting firm Greenwich Associates found that just 55 percent of companies were offering earnings guidance, down from 72 percent in 2003.

The best way to curtail sleazy behavior is to get companies to disclose more information, not less. Critics of earnings guidance would do better to press for change in executive compensation – to better link rewards to long-term performance.