Face Value: Trait Impressions, Performance Characteristics, and Market Outcomes for Financial Analysts

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jats:titleABSTRACT</jats:title>jats:pUsing machine learning–based algorithms, we measure key impressions about sell‐side analysts using their LinkedIn photos. We find that impressions of analysts’ trustworthiness (jats:italicTRUST</jats:italic>) and dominance (jats:italicDOM</jats:italic>) are positively associated with forecast accuracy, especially after recent in‐person meetings between analysts and firm managers. High jats:italicTRUST</jats:italic> also enhances stock return sensitivity to forecast revisions, especially for stocks with high institutional ownership. In contrast, the impression of analysts’ attractiveness (jats:italicATTRACT</jats:italic>) is only positively associated with accuracy for new analysts or when a firm has a new CEO or CFO. Furthermore, while high jats:italicDOM</jats:italic> helps male analysts’ chances of attaining All‐Star status, it reduces female analysts’ accuracy and the likelihood of winning the All‐Star award. In addition, the relation between jats:italicTRUST</jats:italic> and accuracy is modulated by the disclosure environment and is attenuated by Regulation Fair Disclosure. Our results suggest that face impressions influence analysts’ access to information and the perceived credibility of their reports.</jats:p>

3501 Accounting, Auditing and Accountability, 3502 Banking, Finance and Investment, 35 Commerce, Management, Tourism and Services
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Journal of Accounting Research
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