CEO Pulchritude, Overconfidence and Management Guidance

• In Event: CEO/CFO Impact

Abstract

Pulchronomics is the economics study of beauty (Kim et al., 2017). It is commonly believed that good looking people are overconfident but little is known about how the association between the two are quantified. Calculating an attractiveness score based on facial symmetry, I study CEO pulchronomics by examining whether CEO pulchritude is related to CEOs’ overconfidence. I also examine whether CEOs’ pulchritude is associated with the attributes of management guidance, mainly in management guidance pattern and accuracy. I find that attractive CEOs are overly confident and therefore disclose management guidance more frequently. However, attractive CEOs are reluctant to correct their forecasts in a shorter horizon. Consequently, management forecasts made by attractive CEOs are inaccurate and analysts are being skeptical about their forecasts. My study provides first evidence of the association between CEO pulchritude and overconfidence. My paper also provides first evidence of management forecast behaviors based on CEO pulchronomics.

Authors

• Jun Guo, Rutgers University - Camden

• Jung Yeun Kim, Rutgers, The State University of New Jersey, Camden

• Sungsoo Kim, Rutgers University

• Nan Zhou, SUNY-Binghamton