What is it about?
The relative-age effect suggests that older individuals within a cohort are more successful. This study investigates if the relative-age effect exists for CEO’s in the S&P 1500 by analyzing the distribution of their relative age. We utilize an identification strategy that allows us to calculate a CEO’s relative age in months and enables us to resolve known identification problems. We find no support for the existence of the relative-age effect for CEOs either by season of birth or relative age in months. On the whole, the distribution of CEO birth dates is similar to the US population.
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Why is it important?
Previous literature documents that the birth distribution of CEO's differs from the population as a whole. There is a further suggestion that the relative age effect (birth date relative to your school grade cohort) may affect firm performance. Our research show that with a larger data set that is better able to identify a relative age effect within a cohort, CEO birth dates do not statistically deviate from the population in general. Moreover, the relative age effect appears to have no effect on firm performance.
Perspectives
With the growing literature on CEO characteristics and their effect on firm performance, we wanted to reexamine the existence and importance of the relative age effect. Whereas previous literature provided evidence that the relative age effect exists, we were able to provide counter-evidence with a significantly larger data set. Studies like ours show the importance of replication work.
Steve Swidler Swidler
Read the Original
This page is a summary of: Reexamining the relative-age effect and career success: new evidence from S&P 1500 CEOs, Managerial Finance, August 2021, Emerald,
DOI: 10.1108/mf-02-2021-0090.
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