40 Pages Posted: 23 Aug 2016 Last revised: 25 May 2017
Date Written: May 2017
This study is an empirical examination of the extent to which luck can explain sustained performance. Using a unique empirical strategy of bootstrap simulations that we compare to actual performances of public companies, we observe that over 95% of the differences in performance outcomes between “top” versus “average” performers can be attributed to luck, even if all CEOs are equally skilled. Through this novel empirical approach, we can better incorporate the role of luck into studies of sustained performance, and our findings suggest that more attention should be placed on the role of unanticipated and even uncontrollable changes on performance.
Keywords: luck, CEO evaluation, upper-echelon theory, sustained performance, performance evaluation
Suggested Citation: Suggested Citation
Kim, Seoyoung and Eberhart, Robert and Armanios, Daniel Erian, What Makes a Winner? Toward Resolving the Role of Luck and Skill in Sustained CEO Performance (May 2017). Available at SSRN: https://ssrn.com/abstract=2827132 or http://dx.doi.org/10.2139/ssrn.2827132