Oh! I know about this one! So the reason why this doesn't happen the way it should - analysts being completely divorced from the "skin in the game" folks - is

Oh! I know about this one! So the reason why this doesn't happen the way it should - analysts being completely divorced from the "skin in the game" folks - is because there's a ton of money involved and the buy side people tend to baby deals along. My 1000 foot understanding is that companies are structured (on paper any way) such that a broker/sales guy sets up a deal, then passes it off to underwriters who take a good hard look at what's going on - basically making sure the deal is a) on the up and up and b) will preform as predicted. They rely on data from analysts. The problem is that many large banks own all the pieces - it's cheaper to have it all in house. This means the sales guy can cook something up, and follow it all the way through the pipes threatening, cajoling, and generally pushing it through. All these finance guys are rewarded for success, everyone is already biased to see the rosy side of things, and when you've got someone talking it up, it's a lot easier to ignore the bad numbers and only see the good.