CEO characteristics and firm performance: focus on origin, education and ownership

Abstract

This study examines the impact of the chief executive officer's (CEO) ownership, education and origin on firm performance. The study uses balanced panel data for 6 years from 2011 to 2016 to run ordinary least square regression. Three variables that include the CEO origin, education and ownership are investigated in relation to firm performance. These characteristics are some of the basic CEO characteristics that are rarely considered by prior studies. The study uses a sample from firms in the financial sector listed on the Nigerian Stock Exchange from 2011 to 2016. The findings indicate that CEO education improves profitability. Similarly, stock performance gets improved when the CEO has prior experience of the firm before being appointed as the chief executive officer. The findings will be useful to shareholders in making an informed decision in selecting the right CEO to manage the firm. Further studies need to consider not only the CEO ownership, but also whether the interest in ownership makes them more powerful.

Good corporate governance and corporate sustainability performance in Indonesia: A triple bottom line approach

“…The upper echelons theory also states that the background of the company leaders will affect how to view the internal and external problems and make decisions (Hambrick and Mason, 1984). Saidu (2019) and Wu et al (2011) described that the leaders who have a good education and strong experience will improve the high managerial skills present, so they will guarantee the company's sustainability. Frydman (2019) and King et al (2016) stated that having a background in business education can improve the managerial skill rather than technical skill.…”

“…A CEO with the higher level of education increases the prospect of the company's sustainability due to the increased capability to manage the company (Abernethy et al, 2019;Javakhadze et al, 2016;Kaur and Singh, 2019). Kokeno and Muturi (2016), Naseem et al (2019) and Saidu (2019) found that the CEO's education has a positive effect on the company's financial performance. Lewis et al (2014) and Tran and Pham (2020) also revealed that the CEO's education level has a positive effect on corporate environmental performance.…”

The Mechanism of Corporate Governance, Financial Performance, and Social Performance in Baitul Maal Wat Tamwil (BMT)

“…Effective policies will have a positive impact on performance, both financial performance and social performance. Saidu (2019) and Darmadi (2013) have proven that CEO education has a significant influence on ROA. Thus, the following hypothesis can be developed:…”

“…Educational background is the basis of some researchers, i.e., Saidu (2019), Ayaba (2012), and Darmadi (2013), as an indicator that influences the effectiveness of managers in performing their duties. Previous studies show that education is important in corporate decision making and the outcome of these decisions is a reflection of CEO quality (Saidu, 2019). Manager education is the basis for assessing the knowledge and skills possessed by management (Cvilikas, Šarapovas, & Aurelijus, 2011).…”

“…They found that CG had a positive influence on CSR. Thus, technical and managerial skills are acquired by a manager when they have higher education (Saidu, 2019).…”