In other news, people are found to act in their own self interests and game whatever rules and systems are in place for their own personal advantage.
Further research reached the surprising conclusion that CEOs are people too, and game the system just like any other person.
[Edit: adding color, as my comment lacked substance to abide by HN's guidelines]
Snark aside, this is a great example on how we need to design robust incentive systems that minimize the chance of gaming them. People are amazing optimizers, and will find any loopholes or gaps that allow them to use any system to their advantage.
CEOs delaying investments, CFOs colluding with industry analysts, rushing product launches, technical debt, etc. are all examples of the same symptom.
"Detecting Earnings Management", by Richard Sloan (a former professor of mine) is a great article that shows the same behavior as this article: managers will anticipate or delay earnings and investments in a way that maximises whatever metric they are evaluated on.
This is further exacerbated by the non-linearity of the market response to earnings surprises. Unsurprisingly, the distribution of earnings surprises over time are not symmetrical to the average market return.
Sure, but your comment breaks the HN guidelines, which ask:
Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something.
It also breaks this guideline, since you've ignored the substantive core of the article:
Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize.
We all know how easy and satisfying it can be to fire off a bit of snark into the internet, but it makes for poor discussion, and actually causes harder systemic problems than outright personal attacks and the like. So please don't post like this to Hacker News.
Further research reached the surprising conclusion that CEOs are people too, and game the system just like any other person.
[Edit: adding color, as my comment lacked substance to abide by HN's guidelines]
Snark aside, this is a great example on how we need to design robust incentive systems that minimize the chance of gaming them. People are amazing optimizers, and will find any loopholes or gaps that allow them to use any system to their advantage.
CEOs delaying investments, CFOs colluding with industry analysts, rushing product launches, technical debt, etc. are all examples of the same symptom.
"Detecting Earnings Management", by Richard Sloan (a former professor of mine) is a great article that shows the same behavior as this article: managers will anticipate or delay earnings and investments in a way that maximises whatever metric they are evaluated on.
This is further exacerbated by the non-linearity of the market response to earnings surprises. Unsurprisingly, the distribution of earnings surprises over time are not symmetrical to the average market return.