Gender and beauty in the financial analyst profession: evidence from the U.S. and China [update of 2017-06]

Abstract

We examine how gender and beauty affect the likelihood of being voted as an All-Star in the financial analyst profession in both the U.S. and China. We find that female analysts are more likely to be voted as All-Star analysts in the U.S., but good-looking female U.S. analysts are less likely to be voted as All-Stars. The conclusion is the opposite for Chinese financial analysts. We find that female analysts in China are less likely to be voted as All-Stars, but the likelihood increases with their facial attractiveness. These findings implicate a beauty penalty for female analysts in the U.S. and gender discrimination against female analysts in China. This career path evidence from a competitive financial industry suggests that gender and beauty biases may be rooted deeply in culture and legal environment and should not be treated homogenously. Valuation Insight: A bias towards beauty suggests suboptimal human resource allocation that may negatively impact firm value. Concentrating on financial analysts this paper finds that a beauty premium exists in that good-looking male analysts are more likely to be voted All-Star (these are paid more and their advice is presumably more likely to be followed). However, the premium disappears for sectors with low information asymmetry between fund managers and analysts (in sectors with more and more experienced analysts generating lower forecast dispersion).