phbs
More than Skin-deep? Analysts’ Beauty and Their Performance
by Yong (George) Yang, Chinese University of Hong Kong

Wednesday, November 23, 2016 | 2:00pm-3:30pm | Room 333, HSBC Business School Building


Abstract


Firm management is a critical information source for sell-side financial analysts. We extend the research on the interaction between financial analysts and firm management by examining whether a predetermined attribute of analysts, namely their physical attractiveness affects their information acquisition and job performance. Using ratings of photos of 2,328 Chinese financial analysts, we find that analysts’ beauty is positively associated with their earnings forecast accuracy and the informativness of their stock recommendations. Supporting our conjecture that more attractive analysts possess an advantage in acquiring information from management, which presumably contributes to their superior performance, we find that more attractive analysts are more likely to update their research reports prior to the public announcement of material corporate news, and that their corporate site visits are more informative to investors. Moreover, tests based on exogenous shocks to firm managers’ reliance on financial analysts suggest taste-based discrimination of managers as an explanation to the beauty effect. Finally, analysts’ beauty bears an implication for their career: more attractive analysts are more likely to be voted as a star analyst and are more likely to switch to a larger brokerage firm.