A Corporate Beauty Contest

John R. Graham (), Campbell R. Harvey () and Manju Puri
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John R. Graham: Fuqua School of Business, Duke University, Durham, North Carolina 27708; and National Bureau of Economic Research, Cambridge, Massachusetts 02912
Campbell R. Harvey: Fuqua School of Business, Duke University, Durham, North Carolina 27708; and National Bureau of Economic Research, Cambridge, Massachusetts 02912

Management Science, 2017, vol. 63, issue 9, 3044-3056

Abstract: We provide new evidence that the subjective “look of competence” rather than beauty is important for CEO selection and compensation. Our experiments, studying the facial traits of CEOs using nearly 2,000 subjects, link facial characteristics to both CEO compensation and performance. In one experiment, we use pairs of photographs and find that subjects rate CEO faces as appearing more “competent” than non-CEO faces. Another experiment matches CEOs from large firms against CEOs from smaller firms and finds large-firm CEOs look more competent. In a third experiment, subjects numerically score the facial traits of CEOs. We find competent looks are priced into CEO compensation, more so than attractiveness. Our evidence suggests this premium has a behavioral origin. First, we find no evidence that the premium is associated with superior performance. Second, we separately analyze inside and outside CEO hires and find that the competence compensation premium is driven by outside hires—the situation where first impressions are likely to be more important.

Keywords: first impressions; thin slicing; CEO selection; competence; likable; trustworthy; attractive; facial traits; CEO compensation; CEO performance; behavioral economics; behavioral finance (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (28)

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https://doi.org/10.1287/mnsc.2016.2484 (application/pdf)

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Working Paper: A Corporate Beauty Contest (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:63:y:2017:i:9:p:3044-3056

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