2015-16 IGM Year in Review

25 ARE CEOS DIFFERENT? CHARACTERISTICS OF TOP MANAGERS We (Kaplan and coauthor Morten Sorensen) use a dataset of more than 2,600 executive assessments to study 30 individual characteristics of candidates for top executive positions, including CEO, CFO, COO, and others. We classify the 30 candidate characteristics with four primary factors: general ability, execution vs. interpersonal, charisma vs. analytic, and strategic vs. managerial details. 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. Steven N. Kaplan Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance