And in the end, a drop one quarter can be followed by a rise the next. Hell, a company should be allowed to take a loss over a few years if it means they are working on something internally that will bring it back to profitability afterwards. But shareholders these days rarely have the icy stomachs for that kind of play.
Software “detects CEO emotions, predicts financial performance”
21–30 of 66 posts
Re: Software “detects CEO emotions, predicts financial performance”
#22Re: Software “detects CEO emotions, predicts financial performance”
#23Paul Ekman talks about the "Desdemona Problem" (https://en.wikipedia.org/wiki/Othello_error), which is always an issue with face-reading of emotions. Many facial expressions (especially those that express on the top half of the face) correlate very well with emotions. But you don't know the context of those emotions or what the person is thinking.
Hence the Desdemona Problem. She is fearful when accused by Othello, not because of infidelity, but because she's being accused. You see that already with the surprising finding that fear and disgust actually correlate with positive financial performance. Yet you see those same emotions in suicidal patients and they're undoubtedly negative.
Re: Software “detects CEO emotions, predicts financial performance”
#24Nice correlation study, but I'm really skeptical of any causation inference that might be possible. I mean, if the software gets to the point where it can identify the next Jeff Skilling[1] then great, but I doubt such surface level data has a lot of predictive potential. I do find it kind of funny that the article cites the study mentioning 'negative' type emotional states aligned with ~9% profit boost, when one of…
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Re: Software “detects CEO emotions, predicts financial performance”
#25> CEOs whose faces during a media interview showed disgust [...] were associated with a 9.3% boost in overall profits in the following quarter.
I'm surprised I haven't seen anyone say "Regression to the mean" yet.
Suppose the CEO gets obviously-scowly whenever their last quarter was abnormally bad... Well, the next quarter will naturally tend to be better, purely because it's a return to a "normal" state of affairs.
In other words, perhaps they've simply found a way to detect the PAST performance by looking at the CEO's face, which is... rather less-useful.
Re: Software “detects CEO emotions, predicts financial performance”
#26If this works on CEOs, then it would work on, say, the chairman of the Federal Reserve, or the heads of other central banks. Predictions gleaned from that data should be much more lucrative.
With higher stakes come greater incentives for counter-measures.
Re: Software “detects CEO emotions, predicts financial performance”
#27Maybe Psychopaths CEO's will be even more common in the future.
Aren't they pretty common already? There was a whole hook written about it.
Re: Software “detects CEO emotions, predicts financial performance”
#28Re: Software “detects CEO emotions, predicts financial performance”
#29> CEOs whose faces during a media interview showed disgust [...] were associated with a 9.3% boost in overall profits in the following quarter. I'm surprised I haven't seen anyone say "Regression to the mean" yet. Suppose the CEO gets obviously-scowly whenever their last quarter was abnormally bad... Well, the next quarter will naturally tend to be better, purely because it's a return to a "normal" state of affairs.…
Exactly what I thought.
Re: Software “detects CEO emotions, predicts financial performance”
#30:) I have to admit I haven't heard of a fund started to use this idea but I guess it was just a matter of time. There are always funds you hear about that are created based on some previously unexplored data signal like this, twitter sentiment is an example that was popular circa 2011. The problem that most of these signals has is that its really not a predictor on its own and it becomes just one of the 100's of sign…
>Is this 90% accuracy for predicting stock movements? Or 90% accuracy for predicting emotions based on facial features?
The latter. Dr. Eckman's work on microexpressions is focused on facial movements as it relates to a small set of commonly felt emotions (i.e. fear, disgust, surprise, happiness). The author is just presenting a possible application of Dr. Eckman's theories.