Graduation Semester and Year
Summer 2026
Document Type
Dissertation
Degree Name
Doctor of Philosophy in Finance
Department
Finance
First Advisor
Sanjiv Sabherwal
Abstract
In the first chapter, “The Human Factor in AI: Evidence on CEO Big Five Traits and Firm AI Patenting,” I examine how CEO personality shapes corporate AI investment. Artificial intelligence (AI) is widely viewed as the defining general-purpose technology of our time, yet firms differ sharply in how aggressively they pursue it. I argue, and show, that a meaningful share of this variation traces to the CEO’s personality. My study investigates how CEO personality traits influence firm-level AI innovation, focusing specifically on the Big Five personality dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism. I find that CEO conscientiousness consistently suppresses AI innovation, whereas CEOs with higher levels of agreeableness and neuroticism significantly foster greater AI innovation outcomes. Moreover, the positive effects of agreeableness and neuroticism are not driven by an early-tenure burst of collaboration or anxiety-fueled experimentation, nor does the negative effect of conscientiousness fade as routines solidify. These personality effects extend beyond R&D spending to shape innovative efficiency, with agreeable and neurotic CEOs extracting greater AI innovation output per dollar invested. When industry growth opportunities expand, agreeable and neurotic CEOs more effectively translate these opportunities into firm value. Finally, channel tests establish that each significant trait operates through its own distinct mechanism.
Building on this focus on AI innovation at the firm level, the second chapter, “Can Analysts Keep Up? Sell-Side Reactions to Firm AI Innovation,” shifts attention to how external information intermediaries respond to such innovation. I study how sell-side analysts respond to firm-level artificial intelligence innovation. Firms generating more intensive AI innovation attract significantly greater analyst coverage, with market-validated innovations exerting the strongest pull. The relationship between AI innovation and analyst following depends on firms’ innovation strategies: exploitative firms that inject exploratory AI activity gain coverage, while already exploratory firms experience diminishing returns from additional novelty seeking. AI innovation also improves the quality of analyst output. Both forecast dispersion and forecast errors decline with AI intensity, and this improvement in forecast properties operates as a channel through which innovation attracts coverage. Analysts covering AI-intensive firms exhibit greater boldness in their forecast revisions, deviating more frequently from both their own priors and the prevailing consensus. The results suggest that AI innovation generates informational benefits by reducing information asymmetry between managers and outside investors, and that financial analysts retain their relevance as intermediaries even as firm value creation shifts toward technologically sophisticated intangibles.
Turning from external analysts back inside the firm, the third chapter, “Do Birds of a Feather Flourish Together? CEO-TMT Homophily and Firm Innovation,” considers how the composition of the executive team itself shapes general firm innovation outcomes. I examine whether similarity between a firm’s CEO and other TMT executives promotes corporate innovation. I construct a novel multidimensional measure of CEO homophily that captures the similarity between firm CEOs and other TMT executives in their shared demographic and cognitive attributes. I find that firms with stronger CEO-TMT homophily exhibit higher innovation output, with the effect concentrated among firms pursuing incremental rather than radical innovation. Demographic (ascribed) similarities drive stronger results than cognitive (achieved) ties, suggesting that readily observable shared traits foster more immediate social identification and psychological safety, encouraging greater risk-taking and experimentation. My mechanism tests reveal that homophily enhances innovation through a “lazy manager” channel, whereby peer pressure among similar executives motivates effort, rather than through a “motivated manager” channel in which career concerns for risk-taking are reduced.
Keywords
AI innovation; CEO personality traits; Artificial intelligence; Analyst coverage; Firm innovation;
License
This work is licensed under a Creative Commons Attribution-No Derivative Works 4.0 International License.
Recommended Citation
Lu, Yilun, "ESSAYS ON CEO, FIRM INNOVATION AND ANALYST BEHAVIOR" (2026). Finance and Real Estate Dissertations. 2.
https://mavmatrix.uta.edu/financerealestate_dissertations2/2