Introducing Sandbagging

Sandbagging is a common business and finance practice that every college student should understand. But what exactly does it mean? Sandbagging can refer to either understating or exaggerating an estimation. In other words, it involves deliberately setting targets too low or too high to give yourself a better chance.

What Are Typical Examples of Sandbagging?

Sandbagging can happen in a wide variety of scenarios. A common example in the financial field is setting overly optimistic earnings expectations during a company’s public offering. This can increase the stock’s appeal for short-term investors, but can have detrimental effects in the long-term if the company fails to meet the forecasted expectations.

Another example of sandbagging happens in the workplace. Managers may set unreasonable deadlines and performance standards, part of which is done to give themselves an excuse to take disciplinary action if the employee falls short. This type of sandbagging is usually done with malicious intent, while other cases may be simply the result of wishful thinking.

Why Do Companies Engage in Sandbagging?

Sandbagging has been used by companies and individuals for centuries. Companies will often sandbag to make their numbers look better, or to artificially inflate their stock price. Individuals may do it to get better results in negotiations or to make themselves look more impressive. The unfortunate thing is that sandbagging sometimes works, but it carries significant risks that must be weighed carefully.

Ultimately, sandbagging should be avoided in business and finance. It can put the company or individual at risk of losing credibility and value. College students should understand the risks and rewards associated with sandbagging and how it can affect their future professional lives.