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Working Paper No. 1024

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

Working Paper
Adams, Renée, Matti Keloharju and Samuli Knüpfer (2014). “Are CEOs Born Leaders? Lessons from Traits of a Million Individuals”. IFN Working Paper No. 1024. Stockholm: Research Institute of Industrial Economics (IFN).

Renée Adams, Matti Keloharju, Samuli Knüpfer

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.