Given all of that, I think you basically can’t get any juice out of this data. If anything I would say the high compensation of CEOs, their tendency to be unusually smart, and skill transferability across different companies seem to provide some evidence that CEO cognitive ability has major effects on firm performance (I suspect there is an economics literature investigating this claim).
There’s a few, for example the classic “Are CEOs Born Leaders?” which uses the same Swedish data and finds a linear relationship of cognitive ability with both log company assets and log CEO pay, though it also concludes that the effect isn’t super large. The main reason there aren’t more is that we generally don’t have good cognitive data on most CEOs. (There are plenty of studies looking at education attainment or other proxies.) You can see this trend in the Dal Bo et al Table cited in the main post as well.
(As an aside, I’m a bit worried about the Swedish dataset, since the cognitive ability of Swedish large-firm CEOs is lower than Herrnstein and Murray (1996)’s estimated cognitive ability of 12.9 million Americans in managerial roles. Maybe something interesting happens with CEOs in Sweden?)
It is very well established that certain CEOs are consistently better than others, i.e. CEO level fixed effects matter significantly to company performance across a broad variety of outcomes.
There’s a few, for example the classic “Are CEOs Born Leaders?” which uses the same Swedish data and finds a linear relationship of cognitive ability with both log company assets and log CEO pay, though it also concludes that the effect isn’t super large. The main reason there aren’t more is that we generally don’t have good cognitive data on most CEOs. (There are plenty of studies looking at education attainment or other proxies.) You can see this trend in the Dal Bo et al Table cited in the main post as well.
(As an aside, I’m a bit worried about the Swedish dataset, since the cognitive ability of Swedish large-firm CEOs is lower than Herrnstein and Murray (1996)’s estimated cognitive ability of 12.9 million Americans in managerial roles. Maybe something interesting happens with CEOs in Sweden?)
It is very well established that certain CEOs are consistently better than others, i.e. CEO level fixed effects matter significantly to company performance across a broad variety of outcomes.