Beauty and Appearance in Corporate Director Elections

Abstract

We study the role of facial appearance in corporate director (re-)elections by means of director photographs published in annual reports. We find that shareholders use inferences from facial appearance in corporate elections, as a better (higher rated) appearance measure of a director reduces voting dissent. These heuristics are based on perceived competence, trustworthiness, likability, and intelligence, but not on physical beauty. The results are valid for director re-elections but not for first appointment elections as in the latter cases, shareholders may not as yet be familiar with a director’s looks. In firms with few institutional shareholders and more retail investors owning small equity stakes, the latter tend to rely more on facial appearance than institutional shareholders, presumably as institutions conduct more research on the director’s background and performance, and consequently rely less on facial appearance. While female directors generally experience lower voting dissent, their facial appearance does not affect their elections results.