First impressions are apparently more important than we realize.
A University of Wisconsin study of CEOs suggests those who scored highest on a facial attractiveness index bring better stock returns early in their tenure and higher returns at times of merger and acquisition announcements. Yes, you read that correctly: Having beautiful people on the job is apparently good for the bottom line.
In a paper titled "Beauty is wealth: CEO appearance and shareholder value," economists Joseph T. Halford and Hung-Chia Hsu laid out their case that magazine-cover looks do, indeed, positively influence shareholder value.
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Studying beauty is an age-old science that started with the ancient Greeks. While wisdom tells us that beauty is skin-deep, the Greeks believed it was a quantifiable measure based on facial features.
Halford and Hsu used biologically-based facial geometry as a quantitative measure in their study. Facial geometry eliminates what's known as perception bias and which is commonly seen in survey-based measurement.
What the researchers found confirmed what most of us learned in junior high – that beauty turns heads and often leads to success.
But they also found that, around their first days on the job, the more attractive CEOs were associated with better stock returns for their companies, what the economists called a "first impression" advantage.
Halford and Hsu told CNBC that Marissa Mayer, the president and CEO of Yahoo, was a good example. "She scored 8.45 (out of 10) in our facial attractiveness index and is among the top 5 percent (best-looking) in our sample," they said. "(And) Yahoo has been doing well since she became the CEO."
Halford and Hsu also tested existing evidence that attractive people have the advantage in negotiating business activities such as mergers and acquisitions. Their study examined all acquisition announcements that occurred during a specific CEO's tenure. What they turned up suggested a "positive and significant" affect of CEO attractiveness on the robust returns around merger and acquisition dates between 1985 and 2012.
The pair also found that visible, attractive CEOs brought better stock returns on the days they were featured on television. The researchers counted both live television appearances and the use of a CEO's image on networks like CNBC, Bloomberg, Fox News, MSNBC and the major broadcast networks. Their study found evidence suggesting shareholders respond positively to viewing more attractive CEOs.
The researchers called this affect the "beauty premium."
So, given these findings, should corporate board try harder to find better-looking CEOs?
"Our results do not suggest that, when searching for CEOs, firms should only look at appearance without considering other abilities," the researchers told CNBC. "On the other hand, for firms that rely more on the negotiation and visibility aspects, maybe they should place more weight on appearance when searching for CEOs."
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