Big data in corporate finance

Published on January 31, 2017   27 min
Hi, my name is Mike Puleo. I'm an Assistant Professor of Finance. And today, I'm gonna be talking about "Big Data and its Applications in Corporate Finance".
Okay, so first of all, to get started, what is big data? You hear this all the time. It's kind of a buzzword. There's a lot of talk about it. But let's be clear and kind of provide some background about what we're actually talking about. So people would usually characterize big data with at least these three characteristics, some people add a fourth. But, first I'm gonna say, the volume. So there's so much more data now than ever was before. I mean, every year there's more new data created than it existed in the entire history until 1997, right? So we have so much data now from so many different sources that it's really, historically, it would have been a problem, right? Handling and analyzing this data becomes an issue in and of itself because there's just so much of it. We're talking about billions of data points. So that's number one, volume. And also, the second point would be, velocity. So not only is there an incredible amount of data more than there was in the past, it's also coming in very quickly. So think about how often, data streams are always coming in. There's new data all the time, Twitter feeds, RFID tags, sensors, and smart metering. So this data is not only an incredible volume, but it's coming in very quickly. And again, so accommodating this speed and amount of data has historically been a big challenge. And it's something that the people are working on now and there's some exciting developments there. And the last characteristic would be, variety. So there's so many different kinds of data now. So with the Internet and the proliferation of the Internet, so we have everything from structured, numeric data that comes in, you know, in database form, rows and columns. And that's what we like, and it's easy to analyze, all the way down to e-mails and qualitative data. And just things like that that have to be processed. And somebody has to go back and sort of take from that what actually can be used and measured. So the volume, velocity, and variety of data, this is what generally refers to big data.