Impression management in the boardroom: How CEO facial trustworthiness influences turnover risk

Ly Vi, Huy Xuan Dang and Nam Thanh Vu

Journal of Behavioral and Experimental Finance, 2024, vol. 44, issue C

Abstract: This paper examines the effect of perceived trustworthiness on the turnover of Chief Executive Officers (CEOs) and its moderating role in the relationship between firm performance and CEO turnover. We employ a unique dataset comprising headshots of male CEOs in US-listed firms from 2010 to 2019 and a machine learning-based facial landmark detector to construct a composite facial trustworthiness index. Our results show that CEOs exhibiting high facial trustworthiness experience a lower turnover risk. We also find that facial trustworthiness strongly influences the link between firm performance and CEO turnover. Well-performing executives have a lower risk of being dismissed from their positions, and the dismissal risk is even lower among CEOs perceived as having a high facial trustworthiness. Conversely, underperforming CEOs are more likely to be dismissed, and the dismissal probability is greater among CEOs who have been perceived as being highly trustworthy. Our findings are consistent with the predictions of the expectancy violation theory, which posits that trustworthy-looking executives are more likely to be punished if they do not live up to the expectations held by the board of directors.

Keywords: Facial trustworthiness; CEO turnover; Firm performance; Machine learning; Facial landmark detector (search for similar items in EconPapers)
JEL-codes: D80 G39 J63 J79 M12 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:44:y:2024:i:c:s2214635024000935

DOI: 10.1016/j.jbef.2024.100978

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