Male Stock Analysts With 'Dominant' Faces Get More Information-and Have Better Forecast... - 0 views
www.wsj.com/...tion-better-forecasts-6783f77c
stock analysts face dominance trust trustworthy attractiveness accuracy psychology
![](/images/link.gif)
-
“People form impressions after extremely brief exposure to faces—within a hundred milliseconds,” says Alexander Todorov, a behavioral-science professor at the University of Chicago Booth School of Business. “They take actions based on those impressions,”
-
. Under most circumstances, such quick impressions aren’t accurate and shouldn’t be trusted, he says.
-
Prof. Teoh and her fellow researchers analyzed the facial traits of nearly 800 U.S. sell-side stock financial analysts working between January 1990 and December 2017 who also had a LinkedIn profile photo as of 2018. They pulled their sample of analysts from Thomson Reuters and the firms they covered from the merged Center for Research in Security Prices and Compustat, a database of financial, statistical and market information
- ...8 more annotations...
-
The researchers used facial-recognition software to map out specific points on a person’s face, then applied machine-learning algorithms to the facial points to obtain empirical measures for three key face impressions—trustworthiness, dominance and attractiveness.
-
They examined the association of these impressions with the accuracy of analysts’ quarterly forecasts, drawn from the Institutional Brokers Estimate System
-
Analyst accuracy was determined by comparing each analyst’s prediction error—the difference between their prediction and the actual earnings—with that of all analysts for that same company and quarter.
-
For an average stock valued at $100, Prof. Teoh says, analysts ranked as looking most trustworthy were 25 cents more accurate in earnings-per-share forecasts than the analysts who were ranked as looking least trustworthy
-
Similarly, most-dominant-looking analysts were 52 cents more accurate in their EPS forecast than least-dominant-looking analysts.
-
The relation between a dominant face and accuracy, meanwhile, was significant before and after the regulation was enacted, the analysts say. This suggests that dominant-looking male analysts are always able to obtain information,
-
While forecasts of female analysts regardless of facial characteristics were on average more accurate than those of their male counterparts, the forecasts of women who were seen as more-dominant-looking were significantly less accurate than their male counterparts.
-
Says Prof. Todorov: “Women who look dominant are more likely to be viewed negatively because it goes against the cultural stereotype.