Can managers’ facial expressions predict future company performance and risk? Evidence from China

This paper adopts a cognitive dissonance theory viewpoint to investigate the impact of managers’ facial emotion on market performance and risk in Chinese listed companies from 2016 to 2022, and employs a deep learning model to analyze managers’ facial emotion. We find that the more positive facial expressions of managers in earnings conference call predict better market performance, lower volatility and stock price crash risk. After conducting a series of robustness tests, the conclusion still holds. This study provides investors with a new analytical method and also provides market regulators with a reference for relevant policy formulation.