Does School Matter? An Empirical Analysis Of CEO Education, Compensation, And Firm Performance

Abstract

In this paper the educational background of the Chief Executive Officers (CEOs) of Large U.S. Firms are examined. Specifically, the educational background of CEOs from large U.S. firms, as identified in the Forbes 800 Compensation List, are examined. Information concerning the number of Chief Executive Officers that received their undergraduate and graduate degrees from 463 institutes of higher education are compiled. We find that most CEOs have an undergraduate degree, while about half possess a graduate degree. The results indicate that there are preferred educational backgrounds for selection as the CEO of a major corporation. We also examine how the educational background of the CEO is related to the CEOs total compensation. The evidence indicates that those CEOs that do not have a degree earn significantly more than those CEOs that do have a college degree. We find little evidence that the school attended affects the compensation that the CEO receives. Finally, we examine firm ROA and Tobins Q based on the educational background of the CEO. We find an association between possession of a degree as well as where the degree was earned and the ROA and Tobins Q of the firm.

Physical Characteristics of the Chief Executive Officer and Firm Accounting and Market-Based Performance

“…The results indicate that an increase in the age of a CEO has no significant negative or positive impact on firm accounting and market-based performance. The finding may be due to the weak physical stamina of senior CEOs that are unable to ensure the efficient utilisation of a firm's resources (Cline & Yore 2016;Jalbert et al 2002). The findings are consistent with those of Soriano & Castrogiovanni, (2012), but inconsistent with Amran et al (2014) who find a significant negative relation between CEO age and the performance of the government-linked companies in Malaysia.…”

“…Therefore, senior CEOs focus on the short-term, rather than long-term, objectives of the firm. Also, senior CEOs are found to be unskilled in regards to estimations; corrective measures; decisive actions; and critical decisions (Cline & Yore 2016;Jalbert, Rao & Jalbert 2002). Accordingly, the death of a senior CEO results in high-value gains (Jenter, Matveyev & Roth 2015).…”

“…Accordingly, the death of a senior CEO results in high-value gains (Jenter, Matveyev & Roth 2015). Many empirical studies also find that senior CEOs have a significant negative association with firm market value (Cline & Yore 2016;Jalbert et al 2002) and the ROA of government-linked companies (Amran et al 2014). Unlike senior CEOs, young CEOs are adept in regards to creativity and acquainted with emerging technologies and trends.…”

CEO Compensation and State Ownership in French Listed Companies

“…Little empirical research has focused on the link between CEOs' educational background and their compensation. As such, Jalbert et al (2002) show a significant relationship between CEO compensation in American companies and their academic careers over the reference period from 1987 to 1996. More recent studies have evidenced a significant relationship between diplomas awarded by a leading university and the average CEOs' salary over the 1997period (Jalbert et al, 2010.…”

Analisis Pengaruh Direktur dan Komisaris Wanita terhadap Performa Perusahaan Asuransi Jiwa di Indonesia

“…Namun dalam kasus ini, tingkat edukasi direksi wanita memberikan dampak negatif terhadap ROE. Hasil tersebut sejalan dengan Jalbert, Ramesh, & Jalbert (2002) yang mengatakan bahwa tingkat edukasi memberikan dampak negatif terhadap performa perusahaan dan kompensasi dikarenakan direktur yang tidak memiliki gelar pendidikan memiliki performa yang lebih baik dibandingkan direksi yang memiliki gelar pendidikan.…”