Are CEOs Born Leaders? Lessons from Traits of a Million Individuals
Renee B. Adams
University of New South Wales; Financial Research Network (FIRN); European Corporate Governance Institute (ECGI)
Aalto University - School of Business; Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)
BI Norwegian Business School; Centre for Economic Policy Research (CEPR); Research Institute of Industrial Economics (IFN)
October 13, 2015
IFN Working Paper No. 1024
FIRN Research Paper No. 2436765
Harvard Business School Research Paper No. 16-044
What makes a CEO? We merge data on the traits of more than one million Swedish males, measured at age 18 in a mandatory military enlistment test, with data on their service as a CEO of any Swedish company decades later. CEOs have higher cognitive and non-cognitive ability scores and are taller than typical members of the population. The difference in traits is larger when CEOs run bigger companies; it is smaller when they run family firms, in particular in the capacity of an heir or in a less competitive industry. Although the traits of CEOs compare favorably with the population, they are hardly exceptional: for example, the median large-company CEO belongs to the top-17% of the population in cognitive ability, and to the top-5% in the combination of cognitive, non-cognitive ability, and height. There are more than one hundred times as many men in managerial roles in the corporate sector who have better trait combinations than the median large-company CEO and who do not become a large-company CEO during our 7-year sample period. Being born with a favorable mix of traits may be necessary but is far from a sufficient condition for making it to the executive suite.
Number of Pages in PDF File: 60
Keywords: CEO, cognitive ability, non-cognitive ability, height, compensation, firm size
JEL Classification: G30, J24, J31
Date posted: May 15, 2014 ; Last revised: October 20, 2015
© 2015 Social Science Electronic Publishing, Inc. All Rights Reserved.
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