Match Made at Birth? What Traits of a Million Swedes Tell Us about CEOs

This paper analyses 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-calibre 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 favourably with those of lawyers. The traits contribute to pay in two ways. First, higher-calibre 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 27−58% of the effect of traits on pay comes from CEO’s assignment to larger companies. Our results are consistent with models where the labour market allocates higher-calibre CEOs to more productive positions

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