One way to boost stock price: Hire a hot CEO [View all]
Can a CEO's face launch a thousand stock purchases?
It doesn't hurt, according to the preliminary findings of a new study, which shows that attractive chief executives receive higher total compensation, better returns on their first days on the job and boost stock performance when they appear on television.
Joseph Halford and Hung-Chia Hsu, two economists at the University of Wisconsin, released a working paper called "Beauty is wealth: CEO appearance and shareholder value." In the paper, they rated the attractiveness of 677 CEOs from S&P 500 companies based on "facial geometry."
The study wanted to find out whether there was a positive relation between the attractiveness of a company's CEO and a return on investment in that company, something argued by John Graham, R.Campbell and Manju Puri in a 2010 paper from Duke University. These three authors said that good looks made CEOs appear more competent and gave them better negotiating skills, enabling them to extract better deals for shareholders.
When looking at the relationship between CEO attractiveness and stock returns around their first day in the job, Halford and Hsu concluded: "We find that FAI (facial attractiveness index) has a positive and significant impact on stock returns surrounding the first day when the CEO is on the job, indicating that shareholders seem to perceive more attractive CEOs to be more valuable."
Halford and Hsu told CNBC that Marissa Mayer, the president and CEO of Yahoo, was a good example, based on their report. "She scored 8.45 (out of 10) in our facial attractiveness index and is among the top 5 percent (best-looking) in our sample," they wrote. "Yahoo has been doing well since she became the CEO (about 158 percent increase in stock price).
http://www.today.com/money/one-way-boost-stock-price-hire-hot-ceo-2D11850724
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