I have never read about a company later stating that its write downs were less than originally estimated. On the other hand, I have read where companies had to revise their write off to a higher level. That said, given the pressure Wall Street puts on companies to be profitable, I expect any "correction" to revise the write offs will be upward, not downward.
“I have never read about a company later stating that its write downs were less than originally estimated.”
Without being able to give you specific examples, it has definitely happened. And, I’d suggest that underestimating adverse impacts vs overestimating isn’t anything like 100:1 in occurrence. Probably not even 10:1. It is largely a matter of corporate ethics and standards. Some companies are conservative in their estimates just as a matter of culture. Of course, the litigation aspects of underestimating impacts of adverse events can be pretty steep. CAT, DE, and T have been around for many, many years, and maybe their conservative ways of running their companies has something to do with that.
Also, consider two generic examples: CAT, I am 100% sure, has a precisely calculated line item in their financials that is based upon a tax advantage based upon existing law. Good, bad, or indifferent, it is there and they’ve been running their biz on the basis of said existing law for years. One day, their corporate attorneys and accountants read newly-enacted law, confer, and believe they will lose said tax advantage. Unless you or I or someone else thinks CAT is being run like Bernie Madoff’s ponzi scheme, where’s the argument?
On the other hand, suppose news comes out as to adverse effects from Vioxx, a drug made by Merck. Or, gas pedals and sudden acceleration issues with Toyotas. You know and I know that a litigation feeding frenzy will result and potentially thousands of cases will be brought. Neither Merck nor Toyota have any practical way of estimating what the impact of all those lawsuits will be over the next several years from the orig date of occurrence. They can state their inability to accurately predict the impact(s). They would be in serious hot water, however, if they made a lowball allowance and badly exceeded it. It’s in these cos’ interests, IMHO, to *overstate* the potential of their current snafus. Wall St. adores “less bad” news, at least lately.
Now if you were to say that *government* cost estimates rarely if ever come in under budget, you’d have my unqualified agreement.