22 January 2019

Taking firms at pretty face value

The research is in and a wealth of academic studies in the United States point to the high correlation between a pretty face and financial rewards. 

The studies reveal a positive link between a person’s height and their income level; and a greater likelihood of a company getting a post-listing lift if they are headed by a good-looking executive. Attractive women can also borrow money at lower interest rates and trustworthy-looking fund managers are more likely to lure investors.

Some local examples seem to fit in with the theory. Asia’s richest man and chairman of Cheung Kong Holdings Ltd. (00001.HK), Li Ka-shing, and internet giant Tencent Holdings Ltd. (00700.HK) chairman Ma Huateng are among the best-looking CEOs, based on Anaface, software pioneered by academics Joseph Halford and Hsu Hung-chia Hsu at the University of Wisconsin-Madison.

But the Hong Kong Economic Journal’s investor diary column reminds investors that in the financial world, physical features are not the bottom line.

A beautiful woman is a good borrower only when she meets a repayment schedule. And medium-term share price performances may have a lot less to do with the look of company leaders than a tangle of factors in play.

Studies in fact show trustworthy-looking fund managers often don’t measure up to the industry’s standard investment performance.

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