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CEO Reputation And Appearance

June 9 2010 - There is a strong association between appearance and success in business organizations according to a study by Duke University published online by the National Bureau of Economic Research. The study paired photographs of chief executive officers (CEOs) of large and small companies with those of non-executives with similar facial features, hairstyles and clothing. Researchers found that those in CEO positions are more likely to be assessed as appearing competent, but less likely to be considered likeable. CEOs who appear competent earn more than their peers, even though there is no measurable association between appearance and company profitability.

John Graham, professor of finance explained:

"Other researchers have found links between beauty and workers' pay, and demonstrated that politicians benefit from good looks at election time. We wanted to see whether appearance also plays a role at the corporate executive level."

In a series of online experiments, researchers asked nearly 2000 participants to assess paired photographs of more than 100 white male CEOs and non-executives. One study involved 765 participants who ranked each pair according to attractiveness, competence, trustworthiness and likeability. CEOs were rated as more competent-looking and attractive. However, they tended to be rated as less trustworthy and likeable than their non-executive pairs. Similar results were found when 762 participants were asked to compare CEOs of large and small firms. Executives of large organizations were rated as appearing more competent 55 per cent of the time, while their small-firm counterparts were assessed more trustworthy, likeable and attractive.

Manju Puri, professor of finance commented:

"It would be fascinating to study the role appearance may play in the careers of women and minorities. However, because there are fewer female and minority CEOs, including them in our set of photos would have increased the odds of participants recognizing a CEO, which could have inadvertently influenced their rating of the person's characteristics."

Researchers found that CEOs rated competent by appearance alone tended to receive a higher income. Those rated four or above on a five-point scale had an average total compensation 7.5 per cent higher than those scoring three out of five on competence. Researchers found no evidence that a CEO's appearance is related to company profitability.

Campbell Harvey, professor of finance said:

"I thought the appearance thing was possible for politicians winning elections -- but for CEOs, no way. We are told that CEOs are very carefully vetted by boards of directors and professional consultants as they should be for their multi-million dollar jobs. The fact that our research shows that appearance is unquestionably significant turns my stomach. Given there is no relation between appearance and company performance, I hope our research changes the way we select our corporate leaders: 'looks' should not be a factor!"

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