Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1024: Are CEOs Born Leaders? Lessons from Traits of a Million Individuals

Matti Keloharju () and Samuli Knüpfer ()
Additional contact information
Matti Keloharju: Aalto University, Postal: and Research Institute of Industrial Economics (IFN), Stockholm
Samuli Knüpfer: London Business School, Postal: and Research Institute of Industrial Economics (IFN), Stockholm

Abstract: Our study combines a near-exhaustive sample of CEOs of Swedish companies with data on their cognitive and non-cognitive ability and height at age 18. Although CEOs, and large-company CEOs in particular, have better traits than the population on average, they are neither exceptional in any of the traits nor their combination. Large-company CEOs belong to the top 5% of the population in their traits, but to top 0.2% in pay. The mismatch between the moderately high trait values and the exceptionally high pay explains why less than a quarter of the CEO pay premium over the population can be attributed to the traits.

Keywords: CEO; Cognitive ability; Non-cognitive ability; Height; Compensation; Firm size

JEL-codes: G30; J24; J31

56 pages, First version: June 3, 2014. Revised: April 16, 2015.

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