Does analyst’s face matter?

Abstract

This study links a conspicuous facial feature of sell-side analysts – facial width-to-height ratio (fWHR) – to their earnings forecasts. We hypothesize that facial masculinity (fWHR), which is a good predictor of aggression, social status-striving, and achievement-striving, is associated with analyst’s forecasting performance. Our empirical findings indicate that forecasts issued by analysts with higher fWHR are more accurate. Analysts with greater facial masculinity issue more bold positive forecasts but fewer bold negative forecasts. Additional analysis suggests that analysts with a higher fWHR exert greater effort and are more likely to be employed by a more reputable brokerage firm. However, our return tests reveal that investors use representativeness heuristic and underreact to forecasts issued by analysts with greater facial masculinity.