Are CEOs Different?

58 Pages Posted: 15 Mar 2016 Last revised: 12 Nov 2019

See all articles by Steven N. Kaplan

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

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: August 1, 2017

Abstract

Using a dataset with 2,603 executive assessments with thirty individual characteristics, we identify who becomes CEO and how CEO candidates differ from candidates for other top management positions, notably CFOs. The variation in the 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 remain predictive for the candidates’ subsequent careers. Candidates with typical CEO candidate 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

Suggested Citation

Kaplan, Steven Neil and Sørensen, Morten, Are CEOs Different? (August 1, 2017). Columbia Business School Research Paper No. 16-27; Paris December 2016 Finance Meeting EUROFIDAI - AFFI. Available at SSRN: https://ssrn.com/abstract=2747691 or http://dx.doi.org/10.2139/ssrn.2747691

Steven Neil Kaplan

University of Chicago - Booth School of Business ( email )

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Morten Sørensen (Contact Author)

Copenhagen Business School ( email )

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Columbia Business School ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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