Which CEO Characteristics and Abilities Matter?

55 Pages Posted: 4 Aug 2008 Last revised: 16 Oct 2022

See all articles by Steven N. Kaplan

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); University of Chicago - Polsky Center for Entrepreneurship

Mark M. Klebanov

University of Chicago - Graduate School of Business (GSB)

Morten Sorensen

Dartmouth College - Tuck School of Business

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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 Neil and Klebanov, Mark M. and Sørensen, 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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European Corporate Governance Institute (ECGI) ( email )

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University of Chicago - Polsky Center for Entrepreneurship

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Mark M. Klebanov

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

5807 S. Woodlawn Avenue
Chicago, IL 60637
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Morten Sørensen

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

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