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Impression management in the boardroom: How CEO facial trustworthiness influences turnover risk

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  • Vi, Ly
  • Dang, Huy Xuan
  • Vu, Nam Thanh

Abstract

This paper examines the effect of perceived trustworthiness on the turnover of Chief Executive Officers (CEOs) and its moderating role in the relationship between firm performance and CEO turnover. We employ a unique dataset comprising headshots of male CEOs in US-listed firms from 2010 to 2019 and a machine learning-based facial landmark detector to construct a composite facial trustworthiness index. Our results show that CEOs exhibiting high facial trustworthiness experience a lower turnover risk. We also find that facial trustworthiness strongly influences the link between firm performance and CEO turnover. Well-performing executives have a lower risk of being dismissed from their positions, and the dismissal risk is even lower among CEOs perceived as having a high facial trustworthiness. Conversely, underperforming CEOs are more likely to be dismissed, and the dismissal probability is greater among CEOs who have been perceived as being highly trustworthy. Our findings are consistent with the predictions of the expectancy violation theory, which posits that trustworthy-looking executives are more likely to be punished if they do not live up to the expectations held by the board of directors.

Suggested Citation

  • Vi, Ly & Dang, Huy Xuan & Vu, Nam Thanh, 2024. "Impression management in the boardroom: How CEO facial trustworthiness influences turnover risk," Journal of Behavioral and Experimental Finance, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:beexfi:v:44:y:2024:i:c:s2214635024000935
    DOI: 10.1016/j.jbef.2024.100978
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    More about this item

    Keywords

    Facial trustworthiness; CEO turnover; Firm performance; Machine learning; Facial landmark detector;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J79 - Labor and Demographic Economics - - Labor Discrimination - - - Other
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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