As an investor, you have to make big decisions about where to put your money. What if you've looked over all the data and thought through all the contingencies, and still you can't make a decision?

A recent research paper suggests you might want to look at executives' faces. 

The eerie correlation between facial shape and behavior 
While it's still unclear why, there is a growing body of evidence that facial shape in men is correlated to testosterone levels -- and testosterone levels are clearly implicated in a variety of behaviors. As the authors put it:

Studies have documented that individuals with higher levels of circulating or baseline testosterone have an enhanced motivation for competition and dominance, display reduced fear, and are more likely to engage in extremely risky behavior such as gambling and alcohol use. These individuals are also more egocentric and have a higher propensity to cheat as well as a stronger desire to maintain social status. 

In other words, high testosterone tends to make people more dominant and risk-seeking (finally, you're thinking, this explains that one guy I used to work with). And for some reason, testosterone levels also tend to be written on a man's face.

Facial masculinity and breaking the rules 
Building on evidence linking a simple measure of facial masculinity to behaviors such as cheating, risk-seeking, and a willingness to exploit others, the study's authors investigated whether it could also predict risky or illegal financial behavior among CEOs.  

The researchers built a sample of 1,136 male CEOs from S&P 1500 companies that included pictures, employment history, and any incidents involving "material accounting misstatements." To uncover whether these incidents were intentional, they also built a sample of 164 companies subjected to SEC "Accounting and Auditing Enforcement Releases" and compared them to a matched sample of clean companies. The researchers ran numerous statistical tests to tease out cause and effect, and whether there was anything else going on under the surface that could explain things.

What did they find? 

"The likelihood for a substantial risk of misreporting is up to 98% higher for CEOs with ... more masculine faces," according to the report. 

The researchers found that masculine-featured CEOs were more likely to be hit with an SEC notice and were also more likely to be singled out by name. Adding CFOs to the analysis confirmed the finding -- this result was linked to individuals, not company-level problems.

The researchers also found that these CEOs and CFOs were more likely to be "opportunistic" traders, meaning they take more risks, and are also more likely to be implicated in stock option backdating practices.

In short, having masculine facial features correlates quite well with risky, opportunistic, or rule-breaking behavior. 

Does this mean I shouldn't trust masculine-looking men?
The evidence is fresh and the subject is complicated, so don't go wild just yet. But whether it eventually falls into practiced psychology or becomes one for the annals of quirky results, the idea that clues about our behavioral tendencies could be written on our faces is deeply interesting. 

While I wouldn't make an investment philosophy out of facial masculinity just yet, it is food for thought -- and definitely an interesting topic to ponder as an armchair psychologist/investor.  

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