Working Paper: NBER ID: w23832
Authors: Steven N. Kaplan; Morten Sorensen
Abstract: We use a dataset of over 2,600 executive assessments to study thirty individual characteristics of candidates for top executive positions – CEO, CFO, COO and others. We classify the thirty candidate characteristics with four primary factors: general ability, execution vs. interpersonal, charisma vs. analytic, and strategic vs. managerial. CEO candidates tend to score higher on these factors; CFO candidates score lower. Conditional on being a candidate, executives with greater interpersonal skills are more likely to be hired, suggesting that such skills are important in the selection process. Scores on the four factors also predict future career progression. Non-CEO candidates who score higher on the four factors are subsequently more likely to become CEOs. The patterns are qualitatively similar for public, private equity and venture capital owned companies. We do not find economically large differences in the four factors for men and women. Women, however, are subsequently less likely to become CEOs, holding the four factors constant.
Keywords: CEOs; CFOs; executive characteristics; hiring outcomes; career progression
JEL Codes: G34; J16; M12; M5; M51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Interpersonal skills (Z13) | Hiring decisions (M51) |
| General ability, execution, charisma, strategic focus (M54) | Likelihood of being hired for CEO vs CFO roles (M12) |
| Higher scores on the four factors (C38) | Future career progression to CEO (J62) |