Faces and Earnings Estimates — and Other Quirks of Business

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Securities analysts with faces that score high for traits of trustworthiness and dominance were found to produce more accurate earnings estimates on the companies they follow. Why?

Facial traits mirror the soul, especially among securities analysts.

Untrustworthy-appearing analysts are all fired before they can acquire industry expertise.

Company executives seemingly grant more access to analysts who look trustworthy and dominant.

Read on: Female analysts with dominant-looking faces produce less-accurate earnings estimate; researchers surmise gender bias against women is at work.

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When financial regulators, such as the Federal Reserve, announce specific bailouts and backstops to calm markets, traders guess how much aid Uncle Sam is really willing to provide. Generally, the market assumes:

The government is good for twice what’s promised if needed.

Half the amount promised.

Precisely what is promised — no more, no less.

Read on: A 7.4% rally in a corporate bond ETF, researchers calculated, was half from an explicit Fed promise to buy bonds and half from expectation the Fed would do more if needed.

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Pay secrecy has contributed to a continuing gender pay gap. Research suggests pay transparency would:

Cause some workers to work harder for no extra pay.

Give employers access to industry data that would help them reduce wages overall.

Be utilized most effectively by those already earning the highest wages in a job category.

All of the above.

Read on: Despite these discouraging findings, free and open access to pay data is certainly considered requisite for eliminating the gender pay gap.

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Familiarity breeds, well, it changes things. When executives from two companies meet in person frequently in the months before agreeing that one will buy the other:

The selling company extracts a higher price.

The buying company clinches the deal at a lower price.

Terms are no different than if they’d done the deal over the phone.

Read on: Privately held companies don’t tend to sell more cheaply even after a lot of face-to-face meetings precede a deal.

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Highly concentrated institutional ownership of a publicly traded company results in more of the firm’s wealth being channeled to shareholders, which entails job cuts and reduced wages. At the same time:

Productivity surges.

Productivity plunges.

There is no substantial change in productivity.

Read on: A 10-percentage point increase in concentrated ownership appears to be associated with a 2.1-to-2.5% reduction in a given firm’s employment and payroll.