How much is CEO education worth to a firm? Evidence from European firms

Ottorino Morresi


The emergence of an industry dedicated to evaluating the quality of university institutions around the world makes it possible to analyze whether students who graduate from highly-ranked schools perform better during their working lives. We focus on the education of CEOs who lead European listed firms and compare this with firm performance. If better schools produce better managers, then we should find better firm performance for firms led by managers who have graduated from highly-ranked schools. We do not find clear support for this assumption and show that the ranking position of a university does not appear to be significantly linked to firm performance. However, the results are highly sensitive to the performance measure used and the type of ranking chosen: QS University Rankings and Times Higher Education University Rankings produce results that are more in line with our assumption. Moreover, unlike accounting ratios, market-based performance measures tend to provide stronger support for our hypothesis.



JEL codes: G34; I26; J24


Human capital; Resource-based view; Upper echelon theory; Market-based performance; Accounting-based performance

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