CEOs’ Facial Trustworthiness and the Narrative Tone Differences of Bilingual Annual Reports

ABSTRACT This research examines the impact of CEOs’ facial trustworthiness on the narrative tone differences of bilingual annual reports in Taiwan, as listed firms have gradually been required to disclose annual reports in their native language (Chinese) and convert them to a non-native language (English). Given that face-based features may reflect managers’ personality traits in decision-making, we employ machine-learning-based facial recognition technology to detect CEOs’ facial trustworthiness. The empirical results show that trustworthy-looking CEOs are negatively associated with a narrative tone difference in bilingual annual reports. This study further finds that CEOs with higher-level ability have an incremental interactive effect on the negative relationship between their facial trustworthiness and bilingual annual reports’ tone difference. Overall, the findings suggest that CEOs’ facial appearance influences their disclosure behavior, reflecting the presentation of annual reports in different languages.