Harvard Business Review LogoAugust 24, 2026Illustration by Ana YaelLeaders often assume that delaying bad financial news until an earnings announcement will soften the market’s reaction. Early disclosure won’t eliminate the harm entirely, but howOn July 14, Arvind Krishna did something CEOs spend their entire tenure hoping to avoid. Eight days before IBM was scheduled to report second-quarter earnings, he published an open letter to investors warning that the results would fall well short of expectations. By the closing bell, IBM’s stock had fallen roughly 25%—the worst single day in the company’s 115-year history. Within days, Wall Street was debating whether activist investors might try to break up Big Blue.
The Right Way to Deliver Bad Earnings News
Leaders often assume that delaying bad financial news until an earnings announcement will soften the market’s reaction. Early disclosure won’t eliminate the harm entirely, but how the warning is delivered can influence whether the stock keeps sliding, whether investors trust the next forecast, and how much time they allow for a fix. When disappointing results become unavoidable, organizations should communicate early, estimate the shortfall, explain the cause, outline a credible response, and avoid promotional messaging that undermines trust.
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