Do Square Faces in CEOs Lead to Lower Carbon Emissions?
Our facial structure may play a role in the actions we take. We are probably all familiar with what folks often call RBF, but there are other ways that our facial structure impacts behavior.
One of these is facial width-to-height ratio (fWHR) - a lower ratio means our face is tall and narrow and a high ratio means it’s more square. A recent study found that this metric in a CEO can affect the amount of carbon emissions released by a company.
CEOs’ facial width-to-height ratio (fWHR) - a stable physical trait associated with aggressiveness and a drive for social dominance and self-interest in men - has gained recent attention. fWHR correlates with testosterone levels in men, which, in turn, is linked to aggressive and dominance-oriented behaviors.
CEOs with high fWHR choose more aggressive and risky corporate policies to achieve social dominance. High-fWHR CEOs are found to have a greater likelihood of engaging in intentional financial misreporting, opportunistic insider trading, options backdating and corporate fraud. Moreover, firms led by high-fWHR CEOs bear higher stock return volatility and higher financial leverage and are more acquisitive.
High-fWHR CEOs are also motivated by a desire to avoid the reputational and regulatory risks associated with perceived environmental negligence. An upcoming paper by Kieu Trang Vu at the University of Wollongong in Australia looked at how fWHR affects carbon emissions reductions.
They found that companies led by high-fWHR CEOs witness a reduction in carbon emissions following the finalization of U.S. State Climate Adaptation Plans. Whereas in contrast firms led by low-fWHR CEOs experienced no change in total carbon emissions post-State Climate Adaptation Plans.
High-fWHR CEO-led firms are more likely to adopt policies aimed at improving carbon emissions reduction, contributing to the observed lower carbon emissions. This effect is greater in firms with high CEO power, headquartered in more collectivist states, and facing lower uncertainty in implementing the climate adaptation plans.
One outcome from the study that might be surprising is that firms with high-fWHR CEOs do not achieve better environmental rating scores after state climate adaptation plans are finalized. The authors believe this is because ESG scores are more likely to be influenced by greenwashing and there may be a lower tendency to engage in greenwashing among firms managed by high-fWHR CEOs.
