@article{a5179449662a4aa0b0f20cb1243213f1,
title = "Facial attractiveness and CEO compensation: Evidence from the banking industry",
abstract = "This paper examines the effect of facial attractiveness on the compensation of bank Chief Executive Officers (CEOs). Consistent with the so-called beauty premium hypothesis, we document that good looks pay off for bank CEOs. Specifically, by utilizing machine learning to assess the facial appearance of the CEOs of large U.S. banks, we find that CEO facial attractiveness is positively associated with the annual total compensation and the discretionary, performance-based components of compensation. The total compensation of above-average looking bank CEOs is about 24% higher than the compensation of CEOs with below-average looks after controlling for various CEO-specific and bank-specific attributes that are known to affect executive compensation. Furthermore, our results indicate that facial attractiveness is weakly positively related to the annual base salary while being unrelated to the pay-performance and pay-risk sensitivities of bank CEO compensation. Overall, our empirical findings provide strong evidence for the existence of a beauty premium in the executive labor market.",
keywords = "512 Business and Management, facial attractiveness, CEO compensation, beauty premium, bank CEOs",
author = "Shaker Ahmed and Mikko Ranta and Emilia V{\"a}h{\"a}maa and Sami V{\"a}h{\"a}maa",
note = "Funding Information: ☆ We thank two anonymous referees, Tom Aabo, John Broussard, Gonul Colak, Filippo Curti, Denis Davydov, Nebojsa Dimic, Michal Dzieli{\'n}ski, Veda Fatmy, Bj{\"o}rn Hagstr{\"o}mer, Jamshed Iqbal, Markku Kaustia, Mikko Lepp{\"a}m{\"a}ki, Lars Nord{\'e}n, Jarkko Peltom{\"a}ki, Vanja Piljak, Elias Rantapuska, Raluca Roman, Elena Shakina, Jukka Sihvonen, Alvaro Taboada, Janne {\"A}ij{\"o}, and conference and seminar participants at the 2021 Annual Meeting of the Southern Finance Association, the 2019 Winter Workshop of the Finnish Graduate School of Finance, HSE University, Stockholm University, and the University of Vaasa for helpful discussions and suggestions. We also thank Rico Wath{\'e}n for research assistance. We gratefully acknowledge the financial support of the OP Group Research Foundation, the Finnish Savings Banks Research Foundation, the Marcus Wallenberg Foundation, the KAUTE Foundation, the Foundation for the Advancement of Finnish Securities Markets, and the Foundation for Economic Education. Part of this paper was written while E. V{\"a}h{\"a}maa was visiting Harvard University and S. V{\"a}h{\"a}maa was visiting Bentley University. Funding Information: We thank two anonymous referees, Tom Aabo, John Broussard, Gonul Colak, Filippo Curti, Denis Davydov, Nebojsa Dimic, Michal Dzieli{\'n}ski, Veda Fatmy, Bj{\"o}rn Hagstr{\"o}mer, Jamshed Iqbal, Markku Kaustia, Mikko Lepp{\"a}m{\"a}ki, Lars Nord{\'e}n, Jarkko Peltom{\"a}ki, Vanja Piljak, Elias Rantapuska, Raluca Roman, Elena Shakina, Jukka Sihvonen, Alvaro Taboada, Janne {\"A}ij{\"o}, and conference and seminar participants at the 2021 Annual Meeting of the Southern Finance Association, the 2019 Winter Workshop of the Finnish Graduate School of Finance, HSE University, Stockholm University, and the University of Vaasa for helpful discussions and suggestions. We also thank Rico Wath{\'e}n for research assistance. We gratefully acknowledge the financial support of the OP Group Research Foundation, the Finnish Savings Banks Research Foundation, the Marcus Wallenberg Foundation, the KAUTE Foundation, the Foundation for the Advancement of Finnish Securities Markets, and the Foundation for Economic Education. Part of this paper was written while E. V{\"a}h{\"a}maa was visiting Harvard University and S. V{\"a}h{\"a}maa was visiting Bentley University. Publisher Copyright: {\textcopyright} 2022 The Authors",
year = "2023",
month = jan,
day = "27",
doi = "10.1016/j.jeconbus.2022.106095",
language = "English",
volume = "123",
journal = "Journal of Economics and Business",
issn = "0148-6195",
publisher = "Elsevier Inc",
}
