Paid For Looks When Others Are Looking: CEO Facial Traits, Compensation, and Corporate Visibility

Posted: 14 May 2020

See all articles by Thomas Canace

Thomas Canace

Wake Forest University

Anna Cianci

Wake Forest University

Xiaotao Kelvin Liu

Northeastern University - Accounting Group

George T. Tsakumis

University of Delaware - Alfred Lerner College of Business and Economics

Date Written: January 2, 2020

Abstract

Using both archival data and survey data in which participants rated the facial traits of S&P 500 CEOs, we find that CEOs perceived as more competent or attractive receive a higher salary but not higher non-salary pay, particularly for firms with higher corporate visibility (conceptualized as investor visibility, customer visibility, and media visibility). However, findings also show that the favorable perceptions of CEO facial traits do not predict firm performance. Further testing shows that externally (internally) hired CEOs are paid a salary premium for looking competent (attractive), suggesting that the salary-facial traits relation may depend on how much information is readily available about the CEO candidate’s ability when s/he is hired. Supplemental analyses provide evidence that the CEO salary-facial traits relation varies depending on CEO characteristics and firm board characteristics. Implications for the CEO labor market are discussed.

Keywords: Facial Traits; CEO Compensation; Corporate Visibility

Suggested Citation

Canace, Thomas and Cianci, Anna and Liu, Xiaotao Kelvin and Tsakumis, George T., Paid For Looks When Others Are Looking: CEO Facial Traits, Compensation, and Corporate Visibility (January 2, 2020). Journal of Business Research, Forthcoming, Northeastern U. D’Amore-McKim School of Business Research Paper No. 3580448, Available at SSRN: https://ssrn.com/abstract=3580448

Thomas Canace

Wake Forest University ( email )

2601 Wake Forest Road
Winston-Salem, NC 27109
United States
336-758-5904 (Phone)

Anna Cianci (Contact Author)

Wake Forest University ( email )

2601 Wake Forest Road
Winston-Salem, NC 27109
United States

Xiaotao Kelvin Liu

Northeastern University - Accounting Group ( email )

404B Hayden Hall
360 Huntington Avenue
Boston, MA 02115
United States
617-373-5926 (Phone)

George T. Tsakumis

University of Delaware - Alfred Lerner College of Business and Economics ( email )

419 Purnell Hall
Newark, DE 19716
United States

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