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

Renée  Adams; Matti  Keloharju; Samuli  Knüpfer

Working Paper | HBS Working Paper Series | 2015

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

by Renée Adams, Matti Keloharju and Samuli Knüpfer

Abstract

What makes a CEO? We merge data on the traits of more than one million Swedish males, measured at age 18 in a mandatory military enlistment test, with data on their service as a CEO of any Swedish company decades later. CEOs have higher cognitive and non-cognitive ability scores and are taller than typical members of the population. The difference in traits is larger when CEOs run bigger companies; it is smaller when they run family firms, in particular in the capacity of an heir or in a less competitive industry. Although the traits of CEOs compare favorably with the population, they are hardly exceptional: for example, the median large-company CEO belongs to the top-17% of the population in cognitive ability, and to the top-5% in the combination of cognitive, non-cognitive ability, and height. There are more than one hundred times as many men in managerial roles in the corporate sector who have better trait combinations than the median large-company CEO and who do not become a large-company CEO during our 7-year sample period. Being born with a favorable mix of traits may be necessary but is far from a sufficient condition for making it to the executive suite.

Keywords: Personal Characteristics; Management Teams;

Language: English

Format: Print

60 pages

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Citation:

Adams, Renée, Matti Keloharju, and Samuli Knüpfer. "Are CEOs Born Leaders? Lessons from Traits of a Million Individuals." Harvard Business School Working Paper, No. 16-044, October 2015.

This paper uses exceptionally rich data on Swedish corporate executives and their personal characteristics to study gender gaps in CEO appointments and pay. Both gaps are sizeable: 18% for CEO appointments and 27% for pay. At most one-eighth of the gaps can be attributed to observable gender differences in executives’ and their firms’ characteristics. Further tests suggest that unobservable gender differences in characteristics are unlikely to account for the remaining gaps. Instead, our results are consistent with the view that male and female executives sharing equal attributes neither have equal opportunities to reach the top, nor are they equally paid.

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

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