Are CEOs Different?

Abstract

Using a dataset of 2,603 executive assessments with thirty individual characteristics, we identify who becomes a CEO candidate and how CEO candidates differ from candidates for other top- management positions, notably CFOs. The variation in characteristics is explained by four factors that we interpret as: general ability, execution (vs. interpersonal), charisma (vs. analytical), and strategic (vs. managerial). CEO candidates have more extreme scores, which differ significantly from those of CFO candidates. An out-of-sample test confirms that these factors are predictive for the candidates’ subsequent careers. Candidates with typical CEO scores are more likely to become CEOs. Conditional on being considered, candidates with greater general ability and greater interpersonal skills are more likely to be hired. These results combined with those in Kaplan, Klebanov and Sorensen (2012) suggest that boards overweight interpersonal skills in their CEO hiring decisions.

Keywords: CEOs, CFOs, COOs, Managerial Characteristics, Hiring Decisions, Corporate Governance

JEL Classification: G30, J23, J24, M12, M51