Wednesday, December 21, 2011

A face only an investor could love...

Here is a quirky item, a bit of a stretch but curious. Given that psychological traits are thought to relate to effective leadership, Wong et al. ask whether any simple physical traits in a leader might correlate with a firms financial performance. They determined the the face width to height ratio of male leaders of 55 Fortune 500 organizations that formed part of the sample of a larger study examining the relationships among CEO characteristics, top-management-team1 processes, and organizational outcomes between 1996 and 2002:
Researchers have theorized that innate personal traits are related to leadership success. Although links between psychological characteristics and leadership success have been well established, research has yet to identify any objective physical traits of leaders that predict organizational performance. In the research reported here, we identified leaders’ facial structure as a specific physical trait that correlates with organizational performance. Specifically, we found that firms whose male CEOs have wider faces (relative to facial height) achieve superior financial performance. Decision-making dynamics within a firm’s leadership team moderate this effect, such that the relationship between a given CEO’s facial measurements and his firm’s financial performance is stronger in firms with cognitively simple leadership teams.

Figure - Industry-adjusted return on assets (ROA) as a function of the cognitive complexity of firms’ top management teams (TMTs) and CEOs’ facial width-to-height ratio (WHR). The slopes illustrated in this graph were calculated using the minimum (low) and maximum (high) values for cognitive complexity and CEO facial WHR. USD = U.S. dollars.

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