Do CEOs' characteristics impact sell-side analysts' recommendations?

Abstract

Purpose: This study aims to examine the association between chief executive officers' (CEOs) characteristics and sell-side analysts' recommendations. Design/methodology/approach: This study uses a sample of firms listed on the London Stock Exchange and uses two databases, Capital IQ and BoardEx to study the above relationship. A variety of regression analyses are used in the empirical models, including ordinary least squares, fixed effect, random effect, Tobit, Logit and generalized method of moments. Findings: The authors find that firms with CEOs who had a wider network size and firms with foreign CEOs receive favorable investment recommendations. Further, firms with CEOs who have more time to retire are more likely to receive favorable investment recommendations. However, the authors find that firms with CEOs with more qualifications receive unfavorable recommendations and female CEOs are not affecting investment recommendations. Originality/value: Ultimately, this study demonstrates the importance of CEO characteristics for sell-side analysts who play an important role in the stock markets.