Financial analysts are experts who constantly collect, analyze, and disseminate information about the prospects of publicly listed firms. Because their recommendations directly influence stock prices, negative evaluations by analysts can sometimes pressure executives to take actions that hurt their firms in the long run. Our new study, published in the Journal of Management Studies, conditions this common view and argues that not all CEOs will react similarly to such pressures. Our study of 296 CEOs of public US firms from 2004 to 2015 finds that more farsighted CEOs – those with longer time horizons for their firms – tend to resist analyst pressure and pursue their strategic agendas in a more active and temporally orchestrated way – that is they exhibit strategic composure.

CEO Time Horizon

The study examines how CEO temporal characteristics affect strategic competitive behaviors in reaction to stock analyst pressures. It argues and finds that responses to analyst recommendations vary across CEOs depending on their time horizons — the degree to which a CEO considers long-term outcomes for current behaviors. CEOs with long time horizons recognize more distant and potentially subtle future market developments and prepare well in advance to address emerging challenges and seize opportunities. In contrast, CEOs with shorter time horizons prioritize current environmental signals and focus more exclusively on immediate corporate needs. In short, CEO time horizons serve as core drivers of strategic composure under pressure.

Time horizons in the study were assessed based on information from multiple sources, including letters to shareholders and transcripts of earnings conference calls. A dictionary was developed of future-oriented time cues, including specific calendar-time points (e.g., 2005, 2006, 2007), numeric time spans (e.g., five years, twenty-years), and non-numeric temporal descriptors (e.g., soon, quickly, long term, short term).

Competitive Behaviors

The study focused on two key temporal attributes of competitive actions: intensity and rhythm. Intensity refers to the number of competitive actions that a firm carries out over a given period. Active competitive engagement reflects initiatives for continued development, whereas having few actions is more suggestive of passivity or preservation. Rhythm is characterized by regularity in temporal intervals between competitive actions. An irregular pattern is suggestive of disruption versus orchestrated strategic development. Both intensity and rhythm provide insight into patterned strategic actions, thereby signaling the importance of CEO time horizons in shaping reactions to analyst pressure.

Negative analyst recommendations were found to motivate executives to initiate fewer competitive actions, and to do so irregularly. However, CEOs with long time horizons resist analyst pressure and preserve intensity and pacing in strategic initiatives.

These findings have important implications for CEO evaluation, promotion, and selection. They also inform executives about fruitful alternatives for managing the pressures such as those from negative financial analyst reports. Such pressures can generate rash or precipitous reactions from executives that erode shareholder returns, and firm and executive reputations. Those may also prevent executives from making socially and environmentally beneficial long-term investments. Our findings suggest that CEOs with extended time horizons can better resist such pressures and remain resolved and coherent in shaping firm strategic actions. In short, temporality may serve as a critical selection criterion in evaluating prospective CEO candidates.