Utilizing a novel machine learning approach to assess CEOs' perceived attractiveness from their photographs, this study examines its influence on market reactions to earnings news. We observed that higher CEO attractiveness scores correlate with an increased frequency of financial report downloads from the Securities and Exchange Commission’s (SEC) Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system following earnings announcements. This surge indicates analysts or investment institutions exhibit heightened attention toward firms with more attractive CEOs surrounding the announcement date. We also find that such attractiveness is linked to a greater return response to earnings news after firms announce earnings. Moreover, the effect of CEO attractiveness is concentrated on days with high investor distraction (when numerous firms announce earnings simultaneously). It means that when faced with an abundance of concurrent company announcements, the distinctive visual appeal of an attractive CEO helps their firm's news stand out, effectively capturing the already scarce attention of analysts amidst a crowded information environment. However, the effectiveness of CEO attractiveness in conveying information diminishes over an annual time-frame. These findings suggest that the influence of CEO aesthetics on information processing efficiency is short-lived, primarily serving as an attention-grabbing mechanism. This evidence points to a first-impression bias in investor behavior, underscoring CEO facial traits' significant yet temporary role in shaping capital market dynamics.

Authors:
Ju-Fang Yen, National Taipei University, Taiwan
Pang-Yu Wang, National Taiwan University, Taiwan
Ya-Ting Lee, National Taipei University, Taiwan
Mao-Wei Hung, National Taiwan University, Taiwan

About the Presenter(s)
Professor Ju-Fang Yen is a University Associate Professor/Senior Lecturer at National Taipei University in Taiwan

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