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Monday, January 6, 2014
Why Hunky CEOs Make for Hot Stocks
Want to boost your company’s stock price? Hire an attractive CEO. That’s the conclusion University of Wisconson economists Joseph T. Halford and Hung-Chia Hsu came to in a recent paper entitled, “Beauty is Wealth: CEO Appearance and Shareholder Value.” Halford and Hsu used a sample of 677 CEOs from companies in the S&P 500 index, ranking their attractiveness based on facial geometry–which they argue “has been well documented to relate to beauty and attractiveness” since the time of ancient Greece. They then measure how this attractiveness correlates to a CEOs compensation, their company’s stock performance on their first days on the job, how well the stock performs after mergers and aquisitions are announced, and how much it appreciates following days they appear on television. They find that in all of these cases, attractive CEOs perform better than their more homely peers, bolstering Halford and Hsu’s theory that investors are more likely to buy the stock of a company run by an attractive CEO, and that good looking CEOs more often get the better end of merger and acquisition negotiations. From this success, they hypothesize, hotter CEOs are able to extract higher pay.