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Is appearance bias in the boardroom the next frontier of corporate governance? Steven McCord, an Analyst in the UK Board Practice, explores the links between physical attractiveness and company performance


If you’re looking to replace your chief executive, then allow me to put forward two outstanding candidates for your consideration: Brad Pitt and Angelina Jolie. Now I’ll be the first to admit that Hollywood’s most famous celebrity couple don’t make it onto many Odgers Berndtson longlists. Neither has a track record of business leadership, nor is either candidate likely to be able to advise you on high-level strategy or your discounted cash flow.

What appointing Brad or Angelina to your board could do, according to the findings of a new study, is boost the share price of your business. In Beauty is Wealth: CEO Appearance and Shareholder Value, University of Wisconsin economists Scott Hsu and Joseph Halford found that attractive CEOs boost stock performance when they appear on television, receive higher total compensation, and achieve better returns on their first days on the job.

How they measured attractiveness is where it really gets interesting: Halford and Hsu loaded the pictures of 677 people who served as CEOs of S&P 500 companies between 2000 and 2012 onto anaface.com, an online photo application that computes a facial beauty score according to a person’s facial geometry (for the thick skinned out there, you can try it yourself here).

If that isn’t enough to strike fear into the heart of every CEO, a “CEO Facial Attractiveness Index” was developed in order to compare scores to various measures of stock performance. The ‘least attractive’ CEO in their sample was found to have a FAI score of 4.01, with the ‘most attractive’ obtaining a score of a 8.80, enough to place them higher than Brad Pitt (8.46) and Angelina Jolie (8.5) – my aforementioned star candidates – on the attractiveness index.

For those lucky CEOs who are deemed to be of above average attractiveness – a score of 7.29 or more – regular media appearances can boost the share price, the study suggests: “Our findings suggest that factors unrelated to informational content, such as the attractiveness of interviewees on television, matter for stock returns.”

Halford and Hsu’s study is not the first time beauty in the boardroom has been investigated. A 2010 report by academics at Duke University found that CEOs are more likely than non-CEOs to be rated as competent based on their physical appearance, and that executive compensation is linked to this perception. “Not only are such facial traits a dominant characteristic of CEOs, they also distinguish CEOs who run large companies from small companies,” the paper said.

In similar vein, a study by psychologists at Tufts University found that companies tend to be more profitable if they have a CEO with a face rated by a random sample of observers as being more competent, dominant and mature. “Even when we controlled for age, affect and attractiveness, CEOs from more versus less successful companies could be distinguished via naïve judgements based solely on perceptions of the CEO’s facial appearance,” the paper said.

Although none of these studies suggest a causal link between physical attractiveness and company performance – simply a positive relationship – the results raise wider questions about appearance bias in the workplace.

Enbar Toledano, an academic at Emory University, argues that as early as infancy and throughout their lifetimes, physically attractive individuals are afforded more favourable treatment and enjoy better opportunities in virtually every aspect of life. “Statistically, these individuals will receive more job offers, better advancement opportunities, and higher salaries than their less attractive peers,” she says.

Determining how much of this is down to nurture or nature largely depends on what study you read. Some researchers argue that physical attractiveness is positively associated with general intelligence, while others contend that the perception of attractive people as more competent leads to them receiving preferential treatment and hence, greater opportunities in the workplace. This is despite the fact they are no more intelligent or capable than their less attractive counterparts.

What are shareholders and board to conclude from all of this? Halford and Hsu are quick to point out that when searching for CEOs, firms should not look solely at appearance. While it is clear that being attractive can provide many benefits to individuals and the companies that they lead, it takes a lot more than a beautiful smile to boost stock performance over the long term. To paraphrase a well-worn saying, good looks fade; the repercussions of appointing the wrong CEO could last forever.


Written by Steven McCord, Analyst

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