Impact of CEO perceived dominance on corporate financial performance: an empirical study based on facial feature extraction via deep learning

Abstract Perceived dominance, which can be formed on the basis of the facial features of a chief executive officer (CEO), can affect the behavior of other firm members (i.e., other executives and subordinates) and impact corporate outcomes. However, a consensus has yet to be reached on the association between CEO perceived dominance and corporate financial performance owing to limitations in sample representativeness, measurement errors, and empirical strategies of previous studies. This study investigates the impact of CEO perceived dominance on corporate financial performance through facial feature extraction via deep learning, which can provide robust and causal insights from a large dataset spanning a long time period of 30 years. Furthermore, this study explores the mechanism of the impact of CEO perceived dominance from the perspective of information flow and sharing by investigating the moderating effects of CEOs’ nonsalary compensation, board size, and the number of business segments. The results indicate that the degree of CEO perceived dominance is negatively associated with corporate financial performance and that a CEO’s high nonsalary compensation, large board size, and large number of business segments can attenuate the negative association. Our findings can deepen the theoretical understanding of the impact of CEO perceived dominance on corporate financial performance and provide managerial implications for the decision-making of investors.