Generalists versus Specialists: Lifetime Work Experience and CEO Pay

Generalists versus Specialists: Lifetime Work Experience and CEO Pay

Claudia Custodio, Miguel Ferreira, Pedro Matos

Series number :

Serial Number: 

Date posted :

April 01 2012

Last revised :

October 24 2018
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  • executive compensation • 
  • Market for executives • 
  • human capital

We show that pay is higher for CEOs with general managerial skills gathered during lifetime work experience. We use CEOs’ résumés of S&P 1,500 firms from 1993 through 2007 to construct an index of general skills that are transferable across firms and industries.

We estimate an annual pay premium for generalist CEOs—those with an index value above the median—of 19% relative to specialist CEOs, which represents nearly a million dollars per year. This relation is robust to the inclusion of firm- and CEO-level controls, including fixed effects. CEO pay increases the most when firms externally hire a new CEO and switch from a specialist to a generalist CEO. Furthermore, the pay premium is higher when CEOs are hired to perform complex tasks such as restructurings and acquisitions. Our findings provide direct evidence of the increased importance of general managerial skills over firm-specific human capital in the market for CEOs in the last decades.

Published in

Published in: 
Publication Title: 
Journal of Financial Economics
Volume 108, Issue number 2, Pages 471-492


Real name:
Research Member
Darden School of Business, University of Virginia