Abstract
This study examines the effects of CEO charisma on securities analysts by analyzing whether CEO Charismatic Images portrayed in organizational discourse influence the favorability of individual analyst recommendations, the uniformity (standard deviation) of analyst recommendations, and the forecast accuracy of individual analysts. CEO Charismatic Images were obtained using a thematic text analysis of the letters to the shareholders for a sample of 367 US firms undergoing a CEO succession in the period 1990-1999. The main results of the study find that CEO charisma significantly affects the perceptions of securities analysts in ways that lead them to individually recommend the firm's stock to investors in a more favorable way; and, collectively, to present to investors more uniform judgments. This uniformity and favorability of analyst recommendations was not accompanied, however, by increased accuracy in individual analyst forecasting of the future performance of the firm. These results suggest that CEO charisma represents a problematic phenomenon in the stock market, possibly leading to investor overconfidence.
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