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Having worked with investment bankers: Statistically speaking, bankers develop various hypotheses re: what "adjustments" might be added to a financial model to
by btown 7y ago
Having worked with investment bankers: Statistically speaking, bankers develop various hypotheses re: what "adjustments" might be added to a financial model to make the company look better to investors. They tell their junior analysts to run the numbers, this flows down the chain, and many late nights and Seamless orders ensue. Experienced bankers have pretty good priors, so most of these hypotheses make the company look better. Even so, all but the best outcomes are rejected, and the analysts whose analyses ended up being useless complain to each other over copious amounts of alcohol.
Essentially, it's as if p-hacking were codified as an industry standard, which is to say, it's exactly p-hacking.
- dbuder 7y agoAnd then, when they get caught they hang out the junior analysts out to dry, and everyone who had any power to stop it is promoted and safe. Example: Lane Cove Tunnel (no not the lawsuit about the exit ramp collapse, the one about traffic forecasting).
- nabla9 7y agoDuring the late 90's stock market boom, the CEO of the biggest bank in Finland made the company bottom line to match his personal phone number as a joke. Getting first two numbers right was the hard part :)