Let’s say you’ve just been hired as a chief financial officer. Congratulations! You get a fancy corner office, a big salary and an assistant who knows your coffee order. Meanwhile you have one very major responsibility: Every quarter, Wall Street will have some expectations about how much money your company should have earned over the last three months. Your job?

“Hit it or exceed it by just a little bit,” said Sarah Williamson, CEO of FCLTGlobal and author of “The CEO’s Guide to the Investment Galaxy.”

Every quarter, she said, a bunch of Wall Street analysts and industry experts look at a bunch of data about your company and your industry and “just like a meteorologist, they gather all sorts of trends and all sorts of data. They analyze it and they try to predict what's coming next.”

And a few weeks before you actually report your earnings (or sometimes even just days before) Wall Street will come up with one number: a tally made up of all these earnings guesstimates.

“And just like a weather forecaster, sometimes they're right and sometimes they're wrong,” said Williamson. “If their estimates are not what the company delivers, the language used is that the company hit or missed. But you'd never say, ‘The sky hit or missed the forecast.’ That's nonsensical.”

It may be nonsensical, but if you miss that forecast, things can get stormy pretty fast. Even if you miss by just a penny, “it’s usually seen as a disaster, a crisis,” she said. 

This might sound dramatic, but it really can be a crisis. Take Target: Last year the retailer’s quarterly sales came in at $25.7 billion instead of the expected $25.9 billion. Investors panicked and Target’s stock lost almost a quarter of its value in one day.

So, it's maybe not surprising that companies will scramble to make sure that they hit Wall Street's guesstimate.

“You take some actions: You delay hiring; you slash advertising; you've got a project, you delay,” said Campbell Harvey, an economist and professor of finance at Duke University's Fuqua School of Business.

Harvey was part of a team that looked into how mandated quarterly earnings impact how companies are run. They surveyed hundreds of CFOs. Among the questions: Have you ever delayed a project to meet quarterly earnings expectations, even though that meant sacrificing shareholder value?

“78% admitted to destroying shareholder value,” said Harvey. “Every single CFO we talked to had done it. This is a deep problem.”

He said companies do all kinds of costly acrobatics to hit these numbers. And that three-month merry-go-round? It’s bad for companies and the economy. And everyone knows this. This confounded Harvey.

“I remember asking a CFO, I said, ‘Well, why don't you just be honest about it?’” he said. After all, there are quarterly earnings calls with shareholders, leadership could simply use that moment to explain why a decision they had made meant earnings came in a little below expectations, but that it would help the company grow in the long run.

“Just say, ‘I didn't wanna delay it. This is really important for the company, so we just did the right thing for shareholders.’ And the answer was something like, ‘This is the reason I'm the CFO, and you're a professor!’” Harvey said.

Logic does not run the show on Wall Street, which is why Harvey was glad to see President Donald Trump taking this up in some recent social media posts. Now the head of the Securities and Exchange Commission has announced plans to move to a system where public companies open their books just twice a year. Many countries actually do this — the U.K., much of Europe. 

But Salman Arif, an economist at the University of Minnesota’s Carlson School of Management, thinks that would be a mistake. He said if you require companies to report less often, it puts mom-and-pop investors at a big disadvantage. “You are benefiting the most sophisticated investors who can afford to buy satellite images of parking lots and who can do all this fancy research.”

Big financial institutions and investment firms actually do this kind of research and data collection: They will use satellite photos to track the number of cars in store parking lots and help estimate sales. Oil analysts have even been known to measure the shadows on oil storage tanks. The tanks have floating roofs, and the size of the shadows can help analysts figure out how much oil is in the storage tanks, and that can help reveal a country’s oil reserves.

Arif said the less official data a company puts out, the more valuable this kind of shadow measuring becomes and the bigger a leg up the shadow-measurers have. 

And of course, he said, companies want privacy. But investors want transparency.

Transparency, said Arif, makes investors feel safe. Arif thinks quarterly reporting is part of why U.S. markets are the biggest in the world. Lose it, and investors might start jumping at shadows — and U.S. markets could lose their edge.