Looking Good by Doing Good: CEO Attractiveness and Corporate Philanthropy

Abstract

We study whether firm managers’ physical appearance affects their decisions on corporate philanthropy. Examining a large sample of corporate donations matched with managers’ attractiveness data, we find that male managers’ motivations for philanthropic giving are driven by their physical attractiveness. In contrast to managers with average looks, attractive managers do not engage more actively in corporate philanthropy; however, unattractive managers are more inclined to participate in charitable giving and contribute a greater amount. Further, the impact of managers’ unattractiveness on their philanthropic decisions is stronger in firms with lower market capitalization, lower managerial compensation, and weaker corporate governance. Inspired by the research in psychology, we propose two psychological channels through which physical attractiveness may influence a manager’s philanthropic decisions. First, corporate executives with undesirable looks may perceive themselves as belonging to a relatively lower social class, which is associated with a greater motivation for conducting philanthropy. Second, because altruistic behaviors may characteristically aggrandize individuals and concretely enhance their performance evaluations, unattractive managers are motivated to contribute to charity to assail the sense of inferiority due to their undesirable appearance. Together, out findings demonstrate a significant link between individuals’ attractiveness features and philanthropic motivations as well as agency problems behind managers’ ostensibly prosocial behaviors that satisfy their self-interest and personal needs.