Appearing Authentic: How Dress Formality Influences Perceived Authenticity in Investment Evaluations

Abstract

This article explores the important but understudied topic of authenticity in investment evaluations. Building on research in authenticity and signaling theory, we theorize how visual first impressions, such as clothing, can generate perceptions of authenticity that lead investors to overlook later quality signals, including a lack of prior experience. We found support for our theory in two field studies and a randomized experiment: investors tend to perceive entrepreneurs who are casually dressed as more authentic than those formally dressed, which is associated with higher investor evaluations. Moreover, perceptions of authenticity generated by casual clothes crowd out later signals: Casually dressed entrepreneurs are evaluated highly regardless of their entrepreneurial experience, but formally dressed entrepreneurs are penalized for perceived inexperience. We discuss the implications of our findings for authenticity research, the temporal order of signals, and early-stage investments.