From Playground to Boardroom: Endowed Social Status and Managerial Performance

Fangfang Du

Journal of Financial and Quantitative Analysis, 2022, vol. 57, issue 3, 988-1022

Abstract: Using U.S. census survey data on CEOs’ residence in their formative years, I document a negative relation between CEOs’ endowed family wealth and managerial performance. Consistent with the view that CEOs born into low-income families face higher entry barriers but may possess greater levels of ability that enable them to become CEOs, I find that CEOs born into less privileged families outperform those from higher-wealth families. The outperformance of CEOs from less wealthy families is not driven by risk taking or omitted variables. Overall, my results suggest that CEOs’ social endowment provides a useful signal for their managerial ability.

Date: 2022
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