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Which CEO Characteristics and Abilities Matter?


Steven N. Kaplan


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Mark M. Klebanov


University of Chicago - Graduate School of Business (GSB)

Morten Sorensen


Columbia Business School; National Bureau of Economic Research (NBER); Swedish Institute for Financial Research (SIFR)
July 2008

NBER Working Paper No. w14195

Abstract:     
We study the characteristics and abilities of CEO candidates for companies involved in buyout (LBO) and venture capital (VC) transactions and relate them to hiring decisions, investment decisions, and company performance. Candidates are assessed on more than thirty individual abilities. The abilities are highly correlated; a factor analysis suggests there are two primary factors with intuitive characterizations -- one for general ability and one that contrasts team-related, interpersonal skills with execution skills. Both LBO and VC firms are more likely to hire and invest in CEOs with greater general abilities, both execution- and team-related. Success, however, is more strongly related to execution skills than to team-related skills. Success is, at best, only marginally related to incumbency, holding observable talent and ability constant.

Number of Pages in PDF File: 55

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Date posted: August 4, 2008  

Suggested Citation

Kaplan, Steven N., Klebanov, Mark M. and Sorensen, Morten, Which CEO Characteristics and Abilities Matter? (July 2008). NBER Working Paper No. w14195. Available at SSRN: http://ssrn.com/abstract=1179865

Contact Information

Steven Neil Kaplan (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-4513 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Mark M. Klebanov
University of Chicago - Graduate School of Business (GSB) ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
Morten Sorensen
Columbia Business School ( email )
3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Swedish Institute for Financial Research (SIFR)
Drottninggatan 89
SE-113 59 Stockholm, SE-113 60
Sweden
Feedback to SSRN (Beta)


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