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Are CEOs Born Leaders? Lessons from Traits of a Million Individuals

60 Pages Posted: 15 May 2014 Last revised: 9 Sep 2017

Renee B. Adams

University of New South Wales, Department of Banking and Finance; ECGI; FIRN; ABFER

Matti Keloharju

Aalto University - School of Business; Research Institute of Industrial Economics (IFN); Centre for Economic Policy Research (CEPR)

Samuli Knüpfer

BI Norwegian Business School; Centre for Economic Policy Research (CEPR); Research Institute of Industrial Economics (IFN)

Date Written: September 3, 2017

Abstract

What makes a successful CEO? We combine a near-exhaustive sample of CEOs of Swedish companies with data on their cognitive and non-cognitive ability and height at age 18. CEOs differ from other high-skill professions most in non-cognitive ability. The median large-company CEO belongs to the top 5% of the population in the combination of the three traits. The traits have a monotonic and close to linear relationship with CEO pay, but their correlations with pay, firm size, and CEO fixed effects in firm policies are relatively low. Traits appear necessary, but not sufficient for making it to the top.

Keywords: CEO, cognitive ability, non-cognitive ability, height, compensation, firm size

JEL Classification: G30, J24, J31

Suggested Citation

Adams, Renee B. and Keloharju, Matti and Knüpfer, Samuli, Are CEOs Born Leaders? Lessons from Traits of a Million Individuals (September 3, 2017). IFN Working Paper No. 1024; FIRN Research Paper No. 2436765; Harvard Business School Research Paper No. 16-044; European Corporate Governance Institute (ECGI) - Finance Working Paper No. 478/2016. Available at SSRN: https://ssrn.com/abstract=2436765

Renée B. Adams

University of New South Wales, Department of Banking and Finance ( email )

Sydney, NSW 2052
Australia
+61(2)93854280 (Phone)

ECGI

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

FIRN

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

ABFER

BIZ 2 Storey 4, 04-05
1 Business Link
Singapore, 117592
Singapore

Matti Keloharju

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland
+358 40 353 8043 (Phone)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Samuli Knüpfer (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

HOME PAGE: http://www.samuliknupfer.com

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Research Institute of Industrial Economics (IFN)

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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