st: Transformation of variable with pos/neg values via asinh

[Steven Delbright <steven.delbright@gmail.com>]

Dear All:

I frequently work with variables that have positive and negative
values, and that also have extreme values. Normally, I just winsorize
the tails and that's the end of the story.

Recently, I frequently come across inverse hyperbolic sine function
(IHS) transformations (stata function asinh). The benefit of IHS is
that it also transforms negative values (contrary to log
transformations). However, the transformed variable typically has two
modes (aka bimodal distribution) -- even though the input variable is
normally distributed (although with extreme values).

My question: Does any of you use asinh, and if so, how do you deal
with the bimodal distribution of the transformed variable? I realize
that the normality assumption of OLS does not require the DV to be
normally distributes (but the residuals) but it still seems strange to
have a DV with two modes...

Thanks
Steven
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