Which CEO Characteristics and Abilities Matter?

55 Pages Posted: 4 Aug 2008  

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

Copenhagen Business School; Columbia Business School; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: July 2008

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.

Suggested Citation

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

Steven Neil Kaplan (Contact Author)

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
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773-702-4513 (Phone)
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National Bureau of Economic Research (NBER)

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Mark M. Klebanov

University of Chicago - Graduate School of Business (GSB) ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Morten Sørensen

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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