Analysts' Beauty and Performance

Cao, Y.; Guan, F.; Li, Z.; Yang, Y.G.

Management Science 66(9): 4315-4335

2020


ISSN/ISBN: 0025-1909
Accession: 081796295

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Abstract
We study whether sell-side financial analysts' physical attractiveness is associated with their job performance. We find that attractive analysts make more accurate earnings forecasts than less attractive analysts. Moreover, more attractive analysts make stock recommendations that are more informative in the short run and more profitable in the long run. Additional analyses reveal that attractive analysts attain their better job performance at least partly through their privileged access to information from firm management. For the sources of the beauty effect, we find that more attractive analysts gain more media exposure, have better connections to institutional investors, and receive more internal support from their employers. Additional evidence suggests that analysts' physical appearance per se at least partly explains our findings. Overall, our study shows that physical attractiveness has a profound impact on the job performance and information access of sell-side financial analysts. This paper was accepted by Shiva Rajgopal, accounting.