PhD Oral Exam - Chen Zhang, Business Administration

When studying for a doctoral degree (PhD), candidates submit a thesis that provides a critical review of the current state of knowledge of the thesis subject as well as the student’s own contributions to the subject. The distinguishing criterion of doctoral graduate research is a significant and original contribution to knowledge.

Once accepted, the candidate presents the thesis orally. This oral exam is open to the public.

Abstract

This dissertation examines the role of CEO activism as a form of nonfinancial communication that shapes how firms are evaluated by external market intermediaries. As CEOs increasingly take public stances on controversial sociopolitical and environmental issues, questions arise about how such behavior is interpreted by third-party experts and whether it influences firm-level outcomes. Focusing on two key information intermediaries—ESG rating agencies and sell-side financial analysts—this dissertation explores the dual role of CEO activism: as a reputational signal of corporate advocacy on public policy and social reform and as a potential source of value-relevant information.

The first chapter investigates whether CEO activism is associated with higher ESG ratings. Using hand-collected data on CEO activism events among S&P 500 firms from 2010 to 2019, the study assesses whether public statements made by CEOs on societal issues are perceived by ESG agencies as credible signals of corporate advocacy on contentious societal issues or dismissed as symbolic gestures. The findings suggest that activism can positively influence ESG ratings, particularly pronounced when CEOs speak out on more controversial issues where the credibility of CEO activism gesture is heightened.

The second chapter explores how financial analysts respond to CEO activism by examining its effect on analyst forecast accuracy. Analysts, as forward-looking information intermediaries, may interpret CEO activism as a useful and credible nonfinancial information that signals strategic direction and corporate value—or as low-quality noise that increases uncertainty. The results show that, on average, CEO activism improves forecast accuracy, especially in firms with stronger governance, greater transparency, and less controversial issue engagement.

Collectively, the findings contribute to the literature by framing CEO activism as both a genuine expression of corporate values and a useful form of nonfinancial communication. In ESG evaluations, CEO activism is seen as a credible expression of corporate leadership and linked to higher ESG ratings. Analysts, by contrast, treat it as a source of nonfinancial information that informs forecasts. Together, the chapters show that the impact of CEO activism depends on the lens of the external experts, shaping how executive voice is understood in capital markets.