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From Playground to Boardroom: Endowed Social Status and Managerial Performance

Published online by Cambridge University Press:  28 January 2021

Fangfang Du Open the ORCID record for Fangfang Du [Opens in a new window]
Fangfang Du*
Affiliation:
California State University Fullerton
*
[email protected] (corresponding author)
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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.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 57 , Issue 3 , May 2022 , pp. 988 - 1022
Copyright
© The Author(s), 2021. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

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Footnotes

I thank an anonymous referee as well as Sreedhar Bharath, Michael Hertzel, Paul Malatesta (the editor), Daniel Metzger, Denis Sosyura, Luke Stein, and seminar participants at the 2018 European Finance Association Meeting, Arizona State University, the 2018 Eastern Finance Association Meeting, the 2018 Southwestern Finance Association Meeting, the 2018 Midwest Finance Association Meeting, California State University Fullerton, and the 2017 Financial Management Association Meeting, for helpful comments. I am very grateful to my dissertation committee, Thomas Bates, Ilona Babenko, Yuri Tserlukevich, and Jessie Wang, for valuable comments and encouragement.

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