What factors can have an influence on a company’s credit rating? Surprisingly, the size of the chief executive officer (CEO)’s signature. Dr Richard Fairchild and Dr Pietro Perotti, along with PhD student Zehan Hou, examined the correlation between narcissism levels in CEOs and the credit rating of their firm.

The researchers used area-per-letter of the signature as a proxy measure of narcissism, aligning the size of signatures with the projection of ego. They then compared this data with information from leading credit rating agency S&P Global Ratings on the companies’ creditworthiness.

What they found was that higher levels of narcissism among CEOs were linked with significantly lower credit ratings. However, this effect was less pronounced in companies facing financial constraints.

This could be explained by the fact that narcissistic personality traits can lead CEOs to behave recklessly or unethically - even making them more likely to engage in white-collar crime. While credit agencies largely use quantitative data around cash flow and liquidity, they also take qualitative information around governance into account when building a profile of a company’s risk levels.

Corporate philanthropy may not be the selfless gesture it seems on the surface. Yes, it’s a form of corporate social responsibility – offering evidence of a company’s commitment to its espoused values – but it is also used to achieve more self-serving goals, such as image management and customer satisfaction.

It can also be deployed opportunistically by CEOs to bolster their firms’ – and by extension their own – reputations.

Research led by Professor Michael Adams examined charitable giving in the UK insurance industry, where most firms are required to disclose annual donations over £2,000. The team compared this data with information on the ‘power’ held by the companies’ CEOs – such as length of tenure, number of shares owned and whether they were also chair of the board.

The study found that CEO power was positively associated with both the likelihood and amount of donations to charitable causes.

It also, however, revealed that firms with other risk-management strategies in place were less likely to donate, as in these cases boards had less impetus to agree to CEOs’ proposals on the matter.

Obviously, CEOs need to have confidence in their decisions and abilities, but what happens when they’re too confident? According to research from Dr Fanis Tsoligkas, along with colleagues from King Abdulaziz University, Durham University and the University of Glasgow, it can act against them in terms of investments in research and development (R&D) and firm performance.

Specifically, the team looked at CEO confidence levels – measured through the language used in their letters to stakeholders – as well as their firm’s accounting around R&D expenditure.

The researchers found that capitalising R&D expenditure (treating it as an asset rather than a cost) shows a positive correlation against future cash flows – this spending enables growth and sends positive signals to both internal and external stakeholders. However, this link was much weaker in companies whose CEO had higher levels of overconfidence. This suggests that the amount capitalised in firms with more overconfident CEOs delivers less future cash flow than in firms with less overconfident CEOs - indicating a signal of lower quality in the first place for such firms.

In firms with greater gender diversity on their board, however, this overconfidence had less of a negative impact, suggesting that more diversity can make for better-quality financial reporting.