Olga Pisarenko

By Olga Pisarenko

Beauty as a business tool

“People should be beautiful in every way: in their faces, in the way they dress, in their thoughts and in their innermost selves.” (A. Chekhov)

From my time at Saïd Business School, I remember learning different financial strategies for value creation and shareholder wealth optimisation. I can recall quite few of them but there was no theory that would relate wealth creation to looks…

As I’ve mentioned in my previous post, I came across a research paper which examines the relationship between the appearance of chief executives’ officers (CEOs) and shareholder value. I was instantly interested as it is quite an unusual type of research, perhaps, ambiguous but still exciting to find out about.

The paper was written by economists Joseph T. Halford and Hung-Chia Hsu from the University of Wisconsin in 2013. It suggests that there is a positive correlation between shareholder value/stock performance and attractiveness of the chief executive running the business. The research follows previously-published findings of John Graham, Campbell Harvey and Manju Puri in a 2010 paper from Duke University “A Corporate Beauty Contest”, which advocates that good looks made CEOs appear more competent and gave them better negotiating skills, enabling them to extract better deals for shareholders.

Shareholder value is a business term, sometimes referred to as “shareholder value maximization or as the shareholder value model, which implies that the ultimate measure of a company’s success is the extent to which it enriches shareholders”.

So how company’s success could be influenced by the looks?

In their study, “Beauty is Wealth: CEO Appearance and Shareholder Value”, the two researchers ranked 677 chief executives from S&P 500 companies based on their facial geometry. They found that good-looking chief executives get paid more, a so-called “beauty premium” (Rosenblatt, Tanya S., 2008), deliver better stock returns on their first days on the job and can send shares higher when they appear on television. “CEO attractiveness may affect shareholder value through the visibility channel, in which media attention may affect a firm’s investor base and stock prices”, the paper says.

The study also found a “positive and significant effect” of CEO attractiveness when announcing acquisitions. “More attractive CEOs receive more surpluses for their firms from M&A transactions, a finding consistent with the hypothesis that more attractive CEOs improve shareholder value through superior negotiating prowess.”

The good example of an attractive chief executive having a positive impact on the stock performance is Yahoo CEO Marissa Mayer, who scored 8.45 (out of 10) points in the researchers’ facial attractiveness index (FAI) and was among the top 5 per cent in the sample.

The good news and useful statistics for females, who plan their way to the Board! The authors said: “Of course, we don’t mean that all the increase in stock price is from her appearance. We just find that there might be some positive correlation between the two.”

The FAI of each of the CEO’s was obtained from, a web-based photo analysis application that computes a facial beauty score according to a person’s facial geometry. The construction of the score “is based on scientific research, various elements of neoclassical beauty, and statistical analysis. Elements used to calculate the facial beauty score include things such as comparing interocular distance to mouth width, and nose width to face height”. For each CEO they sampled the scores from six times, the average of which was then used as a measure of the FAI. In addition, the surveys on the attractiveness of the same sample of CEOs were conducted through Amazon’s Mechanical Turk service. The FAI was “positively related to attractiveness ratings by survey respondents, even after controlling for a number of CEO characteristics and facial traits.”

The authors emphasise that beauty is not the only factor that comes into play when hiring a chief executive, asserting firms should of course consider other abilities but for firms that rely more on the negotiation and visibility aspects, placing more weight on appearance might pay off.

Psychologist Elliot Anderson, of Stanford University, suggests that it perhaps all has something to do with “positive reinforcement: a person’s self-perception, boosted by feedback from others, plays a role in success”. I.e. he, essentially, links better performance to the confidence that people get from the realisation of their looks.

The research brings some good news for women, enabling us to justify spending on cosmetics, hairdressing and clothes! Almost everyone will feel more attractive with the right make-up, haircut and a good dress style. For men, the good haircut, well-groomed facial hair and a great suit will do the trick! It is inarguable.


Of course, the research is very subjective and this prejudice towards attraction is quite discriminative. But in the meantime, it would be interesting, to follow the fortunes of shareholders and investors who built their portfolio on the strength of the attractiveness of the CEOs, over the period.

As for creation of the value outside of the organisation and impact of the CEOs on creating a better world, the great personality would make more impact than looks and no research is needed to back this up.

Back to top of article

Share this post:

follow us in feedly