LVA voice analysis technology – A threat to the credibility of academic financial studies

Hobson, Mayew and Venkatachalam’s paper, Analyzing Speech to Detect Financial Misreporting, is just the last of a series of flawed studies by Mayew and Venkatachalam. The authors insist in using Nemesysco’s LVA technology and give the impression that this is as an emerging speech analysis technology based on Nemesysco’s proprietary secrets. In reality the LVA principles were described in Liberman, A. (2003), US patent No. 6,638,217 B1. Although the ad hoc thresholds used in the program may have been changed since then, the patent unequivocally demonstrates that LVA principles are absurd and incapable of extracting any useful information from the waveforms it is supposed to analyze (see Lacerda (2012), “Money Talks: The Power of Voice – A critical review of Mayew and Ventachalam’s The Power of Voice: Managerial Affective States and Future Firm Performance”, for an explanation of why the LVA technology cannot work). Given the irrelevance of the LVA basic variables, further processing of the measures cannot produce any sensible results (unless information would be added during the processing, which is not the case). The so-called “proprietary secrets” are most likely no more than Nemesysco’s pseudo-scientific wording, circular arguments and incompetent descriptions of the speech production process that are supposed to lead naïve customers into the belief that there are indeed “proprietary secrets. Mayew and Venkatachalam have failed to see through the ungrounded claims of the LVA vendors. As a consequence, Mayew and Ventachalam have so far published a series of inconclusive papers because their results are critically dependent on the validity of LVA technology.
As academic researchers, Mayew and Venkatachalam’s uncritical acceptance of a commercial “black-box” is per se the kind of mistake that researchers should be trained to avoid. Unfortunately, Mayew and Venkatachalam’s assumption of LVA’s validity has surprisingly passed the review hurdles of several finance-oriented publications, conveying the bizarre impression that repeating series of void results may eventually turn them into valid results. However, whereas accommodation to repetition pressure may be an interesting psychological phenomenon and a driving force in the world of finance, where prices and product acceptance are affected by the number of interested customers, scientific explanations must be based on logical and grounded arguments that stand by themselves, independently of superficial customer opinions or market expectations. In summary, circular references do not increase the explanatory power or validity of a claim and any proper speech analysis must be grounded on scientific signal processing principles that stand public scrutiny, rather than on obscure “knowledge” of self-promoted “researchers” or sellers.
Obviously, Hobson, Mayew and Venkatachalam lack competence in the areas of speech analysis and signal processing but they should have been skeptical and demanded convincing answers to pertinent questions about the working principles of the LVA technique. They should also be aware that although correlations may be a useful exploratory tool in epidemiological studies, correlations, even if significant, do not by themselves prove or demonstrate anything unless supported by plausible and adequate models. In the case of an ad hoc constructed algorithm, like LVA, it does not even make sense to explore the algorithm’s validity using correlations. Validity must be demonstrated by the manufacturers’ principled arguments, not by the sort of inconclusive statistical fishing expedition that Mayew and Ventachalam appear to have engaged into. However, because the LVA technology is not supported by any reasonable or even plausible principle, the series of self-references in methodologically flawed papers and the excuse of “proprietary secrets” only fuel the notion that LVA technology is no more than just a sham. Thus, unless Mayew and Ventachalam (or anyone else selling or using LVA-based technology) can independently demonstrate that the processing carried out by LVA provides meaningful emotional information, the technology must be seen as an irrelevant “digital dowsing rod” and it makes of no sense to discuss its results or their implications at this point.
Of course, Nemesysco is not the only company trying to sell “advanced” technology based on pseudo-scientific analyses of speech. There seems to be an expanding market for bogus analyses backed up by aggressive propaganda exploring fiction and myths that may be appealing for a public lacking basic competence in speech processing and phonetics. This can only be stopped by an educated cautious and skeptical public that demands principled evidence for the seller’s claims. Scientists cannot expose all the pseudo-scientific nonsense in society but they have the responsibility of at least not endorsing it, like Mayew and Ventachalam did by adopting a “black-box” that there is virtually no independent reason to believe in. They should be encouraged to perform a scientific reanalysis of all their speech materials. A proper analysis of the speech materials may or not corroborate the authors’ hypothesis but it will, above all, produce results that are worth considering. By insisting to use a technology that they do not grasp and for which there are no scientific grounds, Mayew and Ventachalam are contributing to a mockery of financial research and, by extension, undermining serious science.

References
Lacerda (2012), “Money Talks: The Power of Voice – A critical review of Mayew and Ventachalam’s The Power of Voice: Managerial Affective States and Future Firm Performance”, http://urn.kb.se/resolve?urn=urn:nbn:se:su:diva-74478
Liberman, A. (2003). US patent Patent No. 6,638,217 B1. http://www.freepatentsonline.com/6638217.pdf

Department of Linguistics, Stockholm University http://www.ling.su.se

Comment by Francisco Lacerda — March 13, 2012 @ 1:58 pm

(This comment was initially posted at  http://blogs.law.harvard.edu/corpgov/2012/01/13/analyzing-speech-to-detect-financial-misreporting/, as shown above, but deleted by the moderator about 1 hour later)

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