Gender continues to influence career progression. Academy Professor Matti Keloharju from Aalto University School of Business has recently published research confirming that childbirth, for instance, has a significant detrimental effect on female executives’ pay development. Furthermore, a female CEO remains a rare exception, especially in large companies.
Matti Keloharju has saved a portrait of himself drawn by his son at around age 12.
One important line of research for Matti Keloharju during his Academy Professorship is focused on individual characteristics and success in business life. He is interested to find out what can be learned about CEOs based on an examination of the personal traits of over one million Swedish men, and to what extent traits influence executive careers.
In his first couple of years as Academy Professor, Keloharju has mainly concentrated on studying gender differences. His research data comes from Sweden, where the registers available are far more comprehensive and the time series longer, yet still closely comparable with Finland. After all, the two countries are neighbouring Nordic welfare societies and among the most equal countries in the world.
Keloharju also has access to data from the Swedish military. As only very few female executives have been in the military, data for their brothers are used instead. “We know all the family relations. Our idea has been that since many traits are heritable, sibling correlations are relatively high,” Keloharju says. Indeed, Keloharju and his team have found clear correlations: for instance, brothers of female executives are more often officers than brothers of male executives. Keloharju says this is indicative of managerial skills and executive ambitions.
Women more educated and more intelligent
Female executives are clearly more educated and have higher cognitive ability than male executives. Likewise, the brothers of female executives have higher cognitive ability than male executives. Executives are rarely superintelligent, but have only moderately higher than average cognitive ability. A larger proportion of male than female executives have no higher education.
Keloharju and his team have also studied how male executives spend their paternity leave. In Sweden, the entitlement to paternity leave is lost completely unless it is used by the father. The majority therefore do take paternity leave. Almost all of the shared parental leave is still taken by mothers. “We’re interested to know whether families concentrate on men’s careers. Or if the husband looks after the children, how does this affect the female executive’s career?”
Another line of interest concerns the differences between female executives with and without children. Again, the same pattern is repeated: women who have no children do better than those who do have children. Furthermore, male executives tend to have a larger number of children than female executives, and they are more likely to be married than female executives. Among male executives, 14 per cent have a spouse who is an executive, while among female executives 33 per cent have a spouse in an executive position.
Statistics Sweden data also shed light on time use. Female executives with children are more likely to be absent from work than male executives – although this also includes absences due to parental leave.
No one is born an executive
One of the questions tackled by Keloharju and his team is whether people are born to be leaders. “Our main result suggests that the answer is no. Of course, if you’re born with the right traits that will certainly help you on your way to becoming an executive. But for every person who becomes a large-company CEO there are one hundred persons who are on a business career and who have the same if not stronger personal characteristics”, Keloharju says. His research takes into account the factors of intelligence, social skills and height. Physical fitness is also assessed.
Apart from CEOs, Keloharju and his team have followed executive group members. Female executive numbers tend to be highest in communication, but finance and administration is another strong segment. Sales, on the other hand, is a male-dominated field.
Keloharju says that gender research is particularly useful in shedding light on the mechanisms that hamper women’s career progression. “We’ve been amazed to see just how much is explained by family matters. Perhaps this is clearer to women, but our team happens to consist of men. We’ve reported our results at various conferences attended by leading researchers in the field, including women, and I must say that even they have been surprised by these results.”
Keloharju says his research is both scientifically ambitious and has high social impact. At the outset, it is impossible to say which side will assume greater importance. “I always try to keep in mind the social impact of research. That’s good and important. And my research on women, for instance, is both scientifically ambitious and influences decision-making.”
Matti Keloharju is the second Academy Professor funded by the Academy of Finland in the field of business economics. The first one was Anne Kovalainen, who served as Minna Canth Academy Professor at the University of Turku School of Economics. Keloharju is Professor of Finance at Aalto University Business School. He is widely regarded as one of the world’s leading finance scholars and one of Europe’s leading economists. He has received several awards.
Keloharju’s term as Academy Professor will culminate in hosting the Annual Meeting of the European Finance Association in 2020, an event that is expected to attract an attendance of up to 800 academics. This is a significant meeting, and authors who have their paper accepted for the conference can expect it to provide a major boost to their research career.
Original text in Finnish and photo by Leena Vähäkylä