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How CEO lies can boost stock ratings and deceive even respected financial analysts

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The multi-billion collapse of FTX – a famous cryptocurrency exchange whose founder is now is awaiting trial on fraud charges – serves as a stark reminder of the risks of fraud within the financial world.

FTX founder Sam Bankman-Fried’s lies return to precedent days right on the very starting of the corporate, prosecutors say. As a part of this, it’s alleged, he lied to each customers and investors U.S. Attorney Damian Williams called “one of the largest financial frauds in American history.”

How could so many individuals have apparently been fooled?

A brand new study published within the Strategic Management Journal sheds some light on this issue. In it, my colleagues and I discovered that even skilled financial analysts fall for the CEO’s lies – and that probably the most respected analysts would be the most naive.

Financial analysts provide expert advice to assist corporations and investors generate profits. They predict how much the corporate will earn and suggest whether to purchase or sell its shares. By directing money to good investments, they assist develop not only individual enterprises, but your entire economy.

Although financial analysts are paid for his or her advice, they aren’t oracles. How professor of management, I wondered how often people get fooled by lying managers – so my colleagues and I used machine learning to search out out. We have developed an algorithm, trained on transcripts of S&P 1500 earnings calls from 2008–2016, that can reliably detect fraud In 84% of cases. Specifically, the algorithm identifies various linguistic patterns that occur when an individual lies.

Our results were striking. We found that analysts were significantly more more likely to provide “buy” or “strong buy” recommendations after listening to fraudulent CEOs – by a mean of just about 28 percentage points – than their more honest counterparts.

We also found that highly regarded analysts fell for CEO lies more often than their lesser-known counterparts. In fact, analysts named “stars” by industry publisher Institutional Investor were 5.3 percentage points more likely than their lesser-known counterparts to advance to the upper tier of typically dishonest CEOs.

While now we have applied this technology to realize insight into this area of ​​finance for educational research, its broader application raises quite a lot of difficult ethical questions on the usage of artificial intelligence to measure psychological constructs.

Prone to belief

This seems counterintuitive: Why do skilled financial advisors consistently fall for lying managers? And why do probably the most reputable advisors appear to have the worst results?

These findings reflect the natural human tendency to assume that others are honest – the so-calledtruth bias” This habit makes analysts as vulnerable to lies as anyone else.

Moreover, we found that increased status promotes greater deviation from the reality. First, “celebrity” analysts often turn into overconfident in themselves and their entitlements as their prestige increases. They come to imagine that they’re less more likely to be defrauded, which leads them to take CEOs literally. Second, these analysts are likely to have closer relationships with CEOs, research shows increase error in reality. This makes them even more vulnerable to fraud.

Given this gap, corporations should want to reassess the credibility of “all-star” designations. Our study also highlights the importance of accountability in management and the necessity for strong institutional systems to counter individual biases.

AI “lie detector”?

The tool we developed for this study can have applications beyond the business world. We validated the algorithm using fake transcripts, retracted medical journal articles, and deceptive YouTube videos. It can be easily applied in various contexts.

It is significant to notice that this tool does indirectly measure fraud; identifies linguistic patterns associated with lying. This signifies that even though it is extremely accurate, it’s vulnerable to each false positives and negatives, and false accusations of dishonesty particularly can have devastating consequences.

What’s more, tools like this try to differentiate socially helpful “white lies” – which enhance a way of community and emotional well-being – from more serious lies. Indiscriminately flagging any fraud can disrupt complex social dynamics, resulting in unintended consequences.

These issues have to be addressed before any such technology is widely adopted. But that future is closer than many could imagine: these are corporations in fields akin to investing, security and insurance I’m already beginning to use it.

Many questions remain

Widespread use of artificial intelligence to detect lies would have profound social consequences – particularly, making it harder for the powerful to lie without consequences.

This may sound like an unambiguously good thing. While this technology offers undeniable advantages, akin to early detection of threats or fraud, it can even be disruptive a dangerous culture of transparency. In such a world, thoughts and emotions can turn into subject to measurement and judgment, destroying the sanctuary of mental privacy.

This study also raises ethical questions on the usage of artificial intelligence to measure psychological characteristics, particularly relating to privacy and consent. Unlike traditional deception research, which relies on humans consenting to be tested, this AI model works covertly, detecting nuanced linguistic patterns without the speaker’s knowledge.

The consequences are astonishing. For example, on this study, we developed a second machine learning model to evaluate the extent of suspicion in a speaker’s tone. Imagine a world where social scientists can create tools to evaluate any aspect of your psychology, applying them without your consent. Not very attractive, right?

As we enter a brand new era of artificial intelligence, advanced psychometric tools offer each promise and risk. These technologies have the potential to revolutionize business by providing unprecedented insight into human psychology. They can also violate human rights and destabilize society in surprising and disturbing ways. The decisions we make today – regarding ethics, oversight and responsible use – will set the course for years to come back.

This article was originally published on : theconversation.com
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Business and Finance

David Shands and Donni Wiggins host the “My First Million” conference at ATL

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December is the birth month of David Shands and Donnie Wiggins, friends and business partners. Most people have fun by throwing a celebration. Others imagine it must be catered for. The chosen ones spend the day relaxing in peace and quiet.

Then there’s Shands and Wiggins.

The two decided that the best birthday gift can be to offer individuals with resources for generational wealth through a conference called “My first million”in Atlanta.

It’s a compromise between how their families and family members need to honor them and their desire to proceed to serve others. Shands acknowledges that almost all people won’t understand, and he unapologetically doesn’t expect them to.

“It’s not up to us to convince anyone why we do what we do,” admits Shands.

“I think everyone does what they do for different reasons, and I would just attribute it to a sense of accomplishment that I can’t explain to anyone else.”

He doesn’t need to clarify this to Wiggins because she understands his feelings. Wiggins has had a passion for serving others for so long as she will be able to remember.

“When I was in middle school, there were child sponsorship ads on TV featuring children from third world countries. I was earning money at the time and I asked my mother to send money,” she says BLACK ENTERPRISES.

She recalls how sad she felt for youngsters living in a world with so many opportunities, but at the same time going hungry. Her mother allowed her to send money, and in return she received letters informing her of their progress.

“It was very real to me,” Wiggins says, now admitting she’s undecided the letters were authentic. “I received a letter from the child I sponsored, a photograph and some updates throughout the 12 months. It was such a sense of being overwhelmed and it was something I felt so good about. I didn’t even tell my friends I used to be doing it.”

She carried this sense throughout her life, even when she lost every little thing, including her house, cars, and money. She still found ways to serve and give back, which is the basis of her friendship with Shands.

They each love seeing people at the peak of their potential, and that is what “My First Million” is all about. There can be no higher birthday gift for them than helping others create generational wealth.

What to expect during the “My First Million” conference.

They each built successful seven-figure empires, then train others, write books about it, and launch an acclaimed podcast Social proof.

Now they’re imparting that knowledge through the My First Million conference, an event for aspiring and existing entrepreneurs. Shands and Wiggins need to prove that being profitable is feasible and encourage people to bet on themselves.

“David and I, on paper, are not two people who should have made millions of dollars. Number one, we want (people) to see it,” Wiggins says. “Then we want them to actually get out of that room with practical and actionable steps.”

Both are clear: this just isn’t a motivational conference. This is a conference where people, irrespective of where they’re of their journey, will come away with clarity about their business and what they must be doing as CEOs. Shands and Wiggins want individuals who do not have a transparent marketing strategy or are considering starting a business to also attend the meeting.

“A few areas we will cover are inspiration, information, plan and partnership,” adds Shands. “We will give you 1-2-3 steps because some people get depressed and uninspired. Even if they know what to do, they won’t leave, go home and do it. So we have to really put something into their heads and hearts that they come away with.”

Sign up and enroll for My First Million Here. The conference will happen on December 13 this 12 months. but Shands and Wiggins say it definitely won’t be the last for those who miss it.


This article was originally published on : www.blackenterprise.com
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Business and Finance

Operation HOPE on the occasion of the 10th annual world forum

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Operation HOPE Inc. takes over Atlanta for the biggest game in the country dedicated to financial literacy and economic empowerment, Saporta reports.

The HOPE Global Forums (HGF) Annual Meeting 2024 strengthens the crucial link between financial education, innovation and community upliftment in hopes of finding solutions to the problems that stifle challenges around the world.

Organized by Operation HOPE founder John Hope Bryant, together with co-chairs Atlanta Mayor Andre Dickens and U.S. Ambassador Andrew Young, the forums, to be held December Sep 11 at the Signia Hotel, will have fun its 10th anniversary with three days of engagement discussions, observations and forward-looking presentations.

Under the theme “The Future,” Hope Bryant says attendees are looking forward to a “powerful moment in history.”

“Over the past decade, we’ve brought together great minds with daring ideas, servant leaders with voices for change, and other people committed to a brand new vision of the world as we realize it. “‘The Future’ is a clear call to action for leaders to help ensure prosperity in every corner of society,” he said.

The extensive program includes influential and well-known speakers who address business, philanthropy, government and civil society. Confirmed speakers include White House correspondent Francesca Chambers, media specialist Van Jones and BET Media Group president and CEO Scott M. Mills.

“John Hope Bryant and his team have been doing this for ten years, and every year HGF raises the bar,” Young said. “Discussions about the FUTURE are important not only for civil dialogue; they are also essential to bridging the economic divide and solving some of today’s most important problems.”

Atlanta is predicted to welcome greater than 5,200 delegates representing greater than 40 countries.

“I have long said that Atlanta is a group project, and through our partnership with HOPE Global Forums, we are inviting the world to join the conversation,” Dickens mentioned. “From home ownership and entrepreneurship to youth engagement and financial education, HGF will offer bold and innovative ideas to ensure a bright future for all.”

It coincided with the organization’s annual meeting launched one other path to enhance financial knowledge with HOPE scholarships. With three tiers of scholarships – HOPE Lite, HOPE Classic and HOPE Silver – clients could have access to free financial coaching and academic resources.


This article was originally published on : www.blackenterprise.com
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Business and Finance

New Orleans’ black business district is marked by history

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New Orleans, Black Business Disctrict


New Orleans has given a historic monument to a Black business district closed for interstate construction.

The marker was a project fulfilled by in response to the initiative of Plessy and Ferguson. Founded by descendants of men involved within the Plessy v. Ferguson case that legalized segregation within the United States, the organization worked with other community groups to put a marker under the Claiborne Viaduct.

Before the upheaval, Black New Orleanians could find stores owned by other members of their community on Claiborne Avenue. Racial discrimination originally limited the power to buy on the famous Canal Street. Given this, blacks as an alternative flocked to the realm to purchase every little thing from groceries to funeral arrangements.

This mall was home to many Black-owned businesses, and emerging and established entrepreneurs had arrange shop for generations. Consisting of pharmacies, theaters, studios and more, it helped maintain a vibrant black culture in the realm. It reigned because the most important street of Black New Orleans from the 1830s to the Seventies.

The street once featured a picturesque cover of oak trees surrounding bustling businesses. However, its decline began with the expansion of roads within the southern state. The first casualty was the oak trees that were cut all the way down to make way for the development of Interstate 10, and shortly thereafter, the district’s thriving entrepreneurs suffered an identical fate.

Many residents do not forget that they didn’t know in regards to the upcoming investment until the trees began falling. Raynard Sanders, a historian and executive director of the Claiborne Avenue History Project, remembered the “devastation” felt by the community.

“It was devastation for those of us who were here,” Sanders told the news outlet. “I was walking to school and they were cutting down oak trees. We had no warning.”

Despite its eventual decline, the district stays an integral a part of Black New Orleans entrepreneurship. Now the town will physically resemble a historic center where Black business owners could thrive. They celebrated the revealing of the statue in true New Orleans style with a second line that danced down Claiborne Avenue.

“The significance of this sign is to commemorate the businesses, beautiful trees and beautiful people that thrived in this area before the bridge was built, and to save the people who still stand proud and gather under the bridge,” also said Keith Plessy, a descendant of Homer Plessy’ ego.

The growth of local black businesses continues. Patrons and owners alike hope to evoke the spirit of Claiborne’s original entrepreneurs, empowering the community.


This article was originally published on : www.blackenterprise.com
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