Do Former Soldiers Make Better CEOs?

Do Former Soldiers Make Better CEOs?

Based on the research of Efraim Benmelech and Carola Frydman Chief executives with military experience perform better under pressure and are much less likely to commit corporate fraud.

Do Former Soldiers Make Better CEOs?

While studying the factors affecting corporate governance, Carola Frydman discovered an intriguing trend: corporate CEOs with military experience are steadily vanishing from the industry landscape. Among large, publicly held firms, the proportion of CEOs with military service in their background has decreased by an order of magnitude since 1980 — from 59% to only 6.2%.
Frydman, a visiting associate professor of finance at the Kellogg School (on leave from Boston University), along with Efraim Benmelech, an associate professor of finance at the Kellogg School, were already researching individual leadership personalities. The two decided to investigate the impact that CEOs with military backgrounds might have on the behavior of the firms they lead.

“For economists, it’s not necessarily an obvious view that individual characteristics matter in a corporate leader,” Frydman says. “For quite some time, economists thought it was it was all about the firm as a whole — that the most effective CEO was simply any person who would maximize value by implementing the firm’s policies. But now we are more interested in trying to separate out how much of these outcomes are due to the firm and how much can be attributed to individual leadership.

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