The Impact of CEO Characteristics on Credit Ratings, Tax Avoidance, and Analyst Recommendations

  • Zehan Hou

Student thesis: Doctoral ThesisPhD


Chief executive officers (CEOs) are the most powerful and influential people in a company. Ever since the proposal of upper echelons theory, the impact of CEOs on firm development has been widely investigated in corporate finance. Particularly, extensive research employs CEO characteristics as determinants of various corporate decision-making. Following this stream of research, this thesis focuses on narcissism and general ability of CEOs and examine the impact of these traits on credit ratings, tax avoidance, and analyst recommendations. Specifically, the empirical results show that CEOs with narcissistic tendencies receive lower credit ratings; CEOs with high general ability (generalist CEOs) do not avoid more taxes using cash effective tax rate and book-tax difference as the proxies of tax avoidance; Analysts are more likely to issue an upgrade for generalist CEOs in the analyst recommendations. These results are robust to series of tests.
The thesis contributes to the literature in several ways. It confirms that CEO characteristics have major consequences on corporate behaviours. It provides solid empirical evidence about the impact of CEO general ability on firm policies, such as tax planning. In general, this stream of research focuses on the effect of top executives on financial policies and firm performances. This thesis further extends the stream of research and captures the perspectives of external parties on CEOs. Although there are extant studies that concentrate on the firm-level consequences of narcissistic CEOs, there is little research on the influence of narcissistic CEOs on firm outsiders. This thesis utilizes credit rating agencies as a third party and explores their evaluation of narcissistic CEOs. Similarly, there is rare research that assess generalist CEOs from the angle of external analysts. Through the lens of analyst recommendations, this thesis finds that financial analysts may view generalist CEOs as favourable and are more likely to issue an upward recommendation for generalist CEOs.
Date of Award15 Nov 2023
Original languageEnglish
Awarding Institution
  • University of Bath
SupervisorPietro Perotti (Supervisor) & Richard Fairchild (Supervisor)


  • CEO Characteristics
  • CEO narcissism
  • Generalist CEO
  • Tax avoidance
  • Credit ratings
  • Analyst recommendations

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