The Face of Risk: CEO Facial Masculinity and Firm Risk
European Financial Management, Forthcoming
82 Pages Posted: 30 Jan 2015 Last revised: 18 Feb 2018
Date Written: November 4, 2017
We examine whether a male CEO’s facial masculinity, measured by facial width-to-height ratio (fWHR), predicts the riskiness of his firm. Using the face pictures of 1,162 CEOs in the Execucomp database, we find supporting evidence. Firms with more masculine-faced CEOs have higher stock return volatility and higher financial leverage and are more acquisitive. Their frequency of acquisitions, the dollar amount spent on acquisitions, and the takeover premium are all higher. We find that more masculine-faced CEOs’ compensation is more sensitive to the risk of the firm. The result is robust when we use AI (artificial intelligence)-measured fWHR of the CEOs.
Keywords: masculinity, culture, testosterone, risk, CEO, leverage, M&A, fWHR, VEGA, artificial intelligence
JEL Classification: G02, G32, G34, M1, Z1
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