Symbolic credibility and market effects: Sentiment toward CEOs, political affiliations, and capitalization in stock return dynamics

This study investigates how investor sentiment toward CEOs affects stock returns, moderated by market capitalization and political connections. Using Behavioral Finance and Endorsement Theory, CEOs are viewed as symbolic figures shaping investor perception. Data from 12,480 weekly observations on the Indonesia Stock Exchange were analyzed using Naïve Bayes and PROCESS Macro Model 3. Results show that positive CEO sentiment boosts stock returns, especially in large firms without political ties. The effect weakens with political connections or in small-cap firms, but sentiment strengthens when both factors coexist. This highlights the contextual nature of CEO signaling. The study contributes by integrating psychological and institutional insights in Behavioral Finance and empirically applying a moderated moderation model in emerging markets.