Conclusion

Cheng et al. hypothesized that management demography of CEO is important and reflects valuable
resources of the firm [600]. They examined 5339 firm-year observations of listed Chinese firms.
It was found that various management demographic characteristics (level of education, titles, age
and tenure) of chairpersons significantly influence corporate performance. These findings suggest
that personal attributes of the chairperson are appropriate proxies of human resources and
managerial networking competencies. Kong and Zhang studied interacting and feedback effects
between human capital and performance on the sample of publicly listed Chinese companies [601].
They investigated the effect and efficiency of managerial human capital within different firm
ownership structures. They found that senior manager’s educational level generates a positive
effect on the firm’s operating and market performance. Dominant state control diminishes this
contribution margin. However, the existence of powerful large minority shareholders has a positive
effect. Darmadi [602] provides evidence from Indonesia that the educational qualifications of
board members and CEO matter, to a particular extent, for either return on assets (accounting-
based performance) or Tobin’s Q (market-based performance) For example, CEOs holding
degrees from prestigious universities perform significantly better than those without such
qualifications. There are at least three studies where results suggest that there is no relationship
between CEO’s education and firm performance.

Furthermore, Hitt and Tyler (1991) pointed that the type of education could determine choice of
corporative strategic decision models. However, there is still very limited number of studies, which
investigate impact of different majors of education followed by top managers. Present research
contributes to the literature by addressing this issue. Impact of CEO’s education in economics,
finance, accounting, marketing, engineering, law and fine arts is analyzed. Results suggest that
firm led by CEOs with engineering diploma performs significantly worse. Juridical education has
limited positive impact. All other mentioned kinds of educational background generally don’t
influence performance. Gottesman and Morey (2010) on the sample of 390 U.S. firms examined
both type of education and selectivity of schools from which CEOs have graduated. They found
that educational background of the CEO is not related to financial performance. Firms managed
by CEOs with MBA perform no differently than ones with CEOs who hold undergraduate non-
liberal arts, law or liberal arts undergraduate degrees. Simultaneously, firms headed by CEOs from
more selective schools perform no better than ones with CEOs from less selective schools.

Bhagat et al. (2010) employed much larger sample of 14500 CEO-years corresponding to largest
1500 U.S. firms. They fail to find any significant relationship between CEO’s education and long-
term firm performance. They concluded that education is not a good proxy for abilities. However,
they provide empirical evidence that hiring new CEOs with MBA degree leads to short-term
improvements in performance. Their results suggest that while education background appears to
play an important role for hiring of CEOs, it does not affect performance in the long run. Lindorff
and Jonson (2013) studied the relationship between business education of CEOs of top 200
Australian companies and their firm’s performance. They proved the absence of relationship
between CEO’s MBA, business, or other qualification and firm financial performance. Several
studies (e.g. Mintzberg, 2004; Pfeffer and Fond, 2002) underline that MBA education seems to be
irrelevant to practical tasks that managers have to deal with in real business environment. Rynes
et al. (2003) found that business schools emphasize too much abstract theories and don’t put
enough attention to improving practical skills. Bennis and O’Toole (2005) as well as Hambrick
(2007) figure out that business schools are more focused on research education, rather than
practical management. Further criticism is related to weakness in developing innovative or risk-
taking skills. Finkelstein and Hambrick (1996) pointed that MBA programs stimulate students for
risk-averse behavior by accentuating methods of avoiding possible losses.

Miller at al. (2014) concluded that graduation from an Ivy League affects performance at early
stages of CEO’s careers. Later on, competition with better trained peers supplemented by
experience leads to mitigation of the impact of formal education. Peni (2014) points to the positive
relationship between presence of female CEOs or Chairs and firm performance. Cláudia Custódio
, Daniel Metzger (2014) studied the role of financial expert CEOs in nonfinancial firms indicates
that firms headed by financial expert CEOs tend to hold less cash, more debt, and engage more in
share repurchases. Rachana Kalelkar and Sarfraz Khan (2016) conducted a study that firms where
CEOs possess a background in finance pay lower audit fees, suggesting that auditors consider such
firms to have a lower engagement risk. The results highlight that auditors consider financial
background of CEOs to be an important determinant of audit fees. Our results are robust to a
number of alternative specifications. The results also hold after controlling for managerial ability,
CFO changes, and audit committee characteristics. The instrumental variable and firm-fixed effect
regressions further confirm that firms with financial expert CEOs pay lower audit fees. Overall,
our result adds to the literature on the advantages and disadvantages of a functional background of
top managers and how this background can create value for a firm through savings in audit fees.
Jalbert et al. (2002) employ a sample consisting of Forbes 800 U.S. firms and find that the prestige
of CEO’s graduate school positively influences return on assets (ROA). However, they get
contradictory results while testing the relationship between graduate degree and performance. It is
significantly positive for performance measured basing on Tobin’s Q and negative for return on
assets (ROA).
Hitt and Tyler (1991) pointed that the type of education could determine choice of corporative
strategic decision models. However, there is still very limited number of studies which investigate
impact of different majors of education followed by top managers. In this research contributes to
the literature by addressing this issue Impact of CEO’s education in economics, finance,
accounting, marketing, engineering, law and fine arts is analyzed. Results suggest that firm led by
CEOs with engineering diploma performs significantly worse. Juridical education has limited
positive impact. All other mentioned kinds of educational background generally don’t influence
performance.

Future research work

After studying articles on CEO expertise impact on firm performance I have a bunch of ideas that
can work as future study. Most of authors have argued that CEO financial background is important
for firm performance but grey part is CEO experience. It could be a promising topic if we
concentrate on CEO experience and firm value.
I personally believe it could be a good study, CEO non financial background and firm value’ as no
one has conducted a study. CEO possesses sophisticated characteristics less is still known and can
be addressed in future work like CEO education and leverage, CEO education and corporate social
responsibility.

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