It's a question we get asked often.
It's not bad when done in moderations.  When you take it to the extreme, there are consequenses.
When you take an ordinary street tire that does not have the same amount of sidewall reinforcement as performance tires, and you stretch it, you will have to run very high tire pressure to keep the tire beaded and to prevent tires from collapsing.  Over inflating the tires will reduce the contact patch of the tire as well, and as you might have guessed it will also make your ride a bit more jarring.
Worst case, the tire will de-bead itself, or the sidewalls could give and tear.

Done in moderations there are performance gains to a slight stretch.
The sidewalls have less tendency to roll, and in certain cases allows you to run a wider track width.

On the flip side to all of this, running too wide of a tire can have negative effects on performance.
The sidewalls will "balloon" outward, making tire fitment tricky, and makes the tire less responsive, less stable and less consistent.

Below, you see the same exact 295/30/18 tire resting on the ground.  One tire is not mounted, and the other tire is mounted on a 18x10.5 wheel.

Here you see the mounted tire is almost 19mm more narrow than the un-mounted tire.
With today's tire technology, this small amount pinch will not affect the car's performance by much, but again, this is all in moderation.
If you had this tire mounted on a 10" wide wheel, I would say you might be better off buying one size smaller tire, and you could achieve the same performance.  However, if you were to mount this tire on a 11" wide wheel, it would retain all of the designed contact patch area giving you all of that grip!

Again, this post is not to say what is right and wrong, but to give you the reader some insight.