Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109115
Authors: 
Adams, Renée
Keloharju, Matti
Knüpfer, Samuli
Year of Publication: 
2014
Series/Report no.: 
IFN Working Paper 1024
Abstract: 
This paper analyzes the role three personal traits-cognitive and non-cognitive ability, and height-play in the market for CEOs. We merge data on the traits of more than one million Swedish males, measured at age 18 in a mandatory military enlistment test, with comprehensive data on their income, education, profession, and service as a CEO of any Swedish company. We find that the traits of large-company CEOs are at par or higher than those of other high-caliber professions. For example, large-company CEOs have about the same cognitive ability, and about one-half of a standard deviation higher non-cognitive ability and height than medical doctors. Their traits compare even more favorably with those of lawyers. The traits contribute to pay in two ways. First, higher-caliber CEOs are assigned to larger companies, which tend to pay more. Second, the traits contribute to pay over and above that driven by firm size. We estimate that 2758 percent of the effect of traits on pay comes from CEO's assignment to larger companies. Our results are consistent with models where the labor market allocates higher-caliber CEOs to more productive positions.
Subjects: 
CEO
Cognitive ability
Non-cognitive ability
Height
Compensation
Firm size
JEL: 
G30
J24
J31
Document Type: 
Working Paper

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