In May, the baby-faced chief executive of IndyMac Bancorp, Michael Perry, lashed out at critics who said the bank was on weak footing: "Given the decline in our stock price, some people have questioned IndyMac's survivability in the current environment. I am here to tell you that I believe we have turned a corner."
Shares of IndyMac soared. Two months later, Perry's company laid off half its employees. A little more than a week ago, IndyMac became the third-largest bank in U.S. history to collapse.
Many analysts have studied IndyMac's demise, and the Cassandra-ish role played by Sen. Charles E. Schumer (D-N.Y.), who publicly voiced concerns about the company's viability, triggering a run on the bank. IndyMac's failure also comes in the larger context of a series of woes affecting the U.S. subprime mortgage industry.
But to consumer psychologist Yuwei Jiang, an overlooked aspect of the IndyMac imbroglio is the baby-facedness of the former chief executive.
"He has large eyes, small nose, high forehead and small chin," said Jiang, who is getting his PhD in marketing from the Hong Kong University of Science and Technology. "His babyfacedness might have encouraged customers to see these statements as trustworthy. I believe the innocent face of Mr. Perry played a role here."
Jiang isn't just voicing his opinion. Along with co-authors Gerald J. Gorn, chair of the marketing department at the University of Hong Kong, and Gita Venkataramani Johar of Columbia University, Jiang recently published an unusual study showing how chief executives and company spokespeople with babyish features can influence public perceptions of a failing company and an evolving scandal.
Having a baby-faced chief executive such as Perry can be both asset and liability for companies, customers and the public. In the event of a meltdown in public trust, statements that a company is actually in good shape appear more likely to be believed by the public if a company chief executive or spokesman has a babyish face, rather than a mature-looking face. That can be good for a company being unfairly criticized, but it can be a problem for customers and shareholders if the company is, in fact, on its last legs.
There are competing narratives about whether IndyMac was an innocent victim of its environment or a victim of its own negligence. The company's supporters say Schumer's remarks that the bank was in trouble set off waves of irrational panic that ultimately proved self-fulfilling; Schumer and others argue that the company was mismanaged and poorly regulated.
Jiang, Gorn and Johar recently published their analysis in the Journal of Consumer Research. They had volunteers evaluate claims of innocence made by the chief executive of a fictitious company called Biomedic, in the context of "news reports" that the company's cold remedy, Coughless, was producing unexpected side effects. The volunteers were given a statement from the company in which the chief executive denied knowing about the side effects ahead of time.
All volunteers were shown a photo of the chief executive; without their knowledge, some volunteers saw a picture whose features had been electronically morphed to appear more babyish -- with large eyes and a relatively small nose and chin. Other volunteers saw a photo that had been morphed to look more aquiline and mature.
"When a PR crisis hits, consumers ask themselves, 'Why did this happen? Who is to blame?' and if the company is blamed, then the next question is, 'Was it intentional?' " Johar said.
People who spend a lot of time tracking the particular company might not be swayed by the appearance of spokesmen and the chief executive, but for the vast majority of people, who form judgments about reputation through fleeting glances, appearances matter. The volunteers in the study were more likely to believe the chief executive's assertions of innocence when his face was babyish rather than mature.
Johar said the bias persisted only up to a point: "We found that if the crisis was very severe, the face did not help -- so even a baby face can't get away with murder."
But Gorn said that even when crises were severe, volunteers whose minds were distracted by other things fell back on the subconscious mental rule of thumb that links babyish features with innocence and naivete. A wide body of research shows people unconsciously apply their "stereotypes" about real babies to adults with babyish features.
The researchers found they were able to reverse the bias in the course of the experiment: Volunteers were shown a number of faces matched with descriptions of various kinds of wrongdoing; the people with babyish features were all said to be guilty of intentional crimes. When these volunteers were tested with the various kinds of chief executive faces and claims of innocence, they were more likely to believe a mature-faced chief executive rather than a baby-faced one.
Gorn advised that people ought to monitor their own reactions to statements made by company spokespeople and other newsmakers: "We hope our research helps people to think twice when they draw inferences . . . and ask themselves whether the face they are looking at in the story is biasing their judgments. A picture may be worth a thousand words, but it doesn't always tell the truth."