Quarterly earnings numbers dominate the decisions of executives, analysts, investors, and auditors. Yet for all the attention paid to these numbers, they're not much use in predicting a company's future performance and cash flows. Nonetheless, meeting analysts' expectations that earnings will rise in a smooth, steady, unbroken line has become, at many corporations, a game whose imperatives override even the imperative to deliver the highest possible return to shareholders. The earnings game distorts corporate decision making. It reduces securities analysis and investing to a guessing contest. It compromises the integrity of corporate audits. Ultimately, it undermines the capital markets. In this article, HBR senior editor Harris Collingwood takes an in-depth look at these effects, examining the intricacies of the earnings game and why companies believe they have no choice but to play it.