CEO Bachelor No Warranty

NOT forever CEO who holds a degree will be able to improve company performance in the long term. There is little evidence that education-related CEO of the company's performance.

A CEO who holds a degree in higher education level, it does not guarantee performance improvement for the better. A study reveals the fact, although the CEO holds a degree, but their performance was no better than those without a degree, even those who dropped out of school though. At least, that's the result of a recent study by the University of New Hampshire, United States (U.S.). In the study "Education CEO, CEO Turnover, and Firm Performance", published September 2010, it was revealed the fact that the CEOs who have a college degree is not always affect the company's performance over the long term.

This fact was revealed when the company's performance was declining, a CEO - they are graduates of prestigious universities though - who claimed to be able to improve the performance of the company, it can not do better than other employees. "Our findings reveal that the board of directors and researchers should be careful in determining the relevant qualification excessive education to assess their ability in leading companies and optimize the performance of stocks," said Brian Bolton, lead researcher and assistant professor of finance at the Whittemore School of Business and Economics University of New Hampshire.

Analysis of research conducted on the relation between education CEO, CEO turnover, and firm performance. The researchers used several measures to assess the CEO education, including whether the CEO is a graduate from 20 universities (PT), famous or not? Does the CEO has an MBA, Law or other master glass from 20 major universities? This study analyzed the data nearly 1,500 companies experience and 2600 cases of CEO turnover from 1992 to 2007.


From this study it was found facts which bring the company to recruit a CEO with an MBA, he was able to improve the operating performance of companies in the short term. However, the researchers found no significant systematic correlation between educational level stakeholders' top management positions with long-term corporate performance. "Our results show, not many CEO educational role in the company's decision to replace the previous CEO performance. CEO performance is less encouraging replaced not because their education level, "he added.

Apparently, CEO of education was instrumental in the process of CEO turnover. There was a significant correlation between education new CEO who was elected with the old CEO is replaced. In fact, education does not seem as CEO of a proper representation to measure the ability of the CEO. From the analysis of existing data, there were 25 offerings CEOs have undergraduate education from PT prominent in the ranks of the top 20, while another 85 percent are alumni of universities in foreign countries that do not enter the top 20 ranks. Then 15 percent of them who has an MBA who is a graduate of S1 than 20 PT famous. Of the CEOs who have a glass of MBA, 63 percent of whom are graduates of MBA programs in 20 PT famous.

Approximately 15 percent of the sample CEOs have S1 degree in law, 44 percent of whom are graduates of the 20 PT famous. Less than 1 percent of CEOs who have two namely MBA and law degree. Approximately 14 percent of CEOs have a non-MBA master's degree and law. By looking at the firm and CEO characteristics across the sample, almost no substantial difference. The average 56-year-old CEO downwards MBA degree. While CEOs are over 56 years the average law master's degree. Working lives of CEOs who holds an MBA on average 8.4 years. While those who hold a master law of averages longer. Well, almost similar levels of performance shares in the entire sample. According to Bolton, none of the size of CEO education are systematically related to the good performance of the company.

Indeed there is little evidence of education related to the performance of the company CEO. While the company probably will enjoy the short-term performance improvement by hiring the CEO holds an MBA, or otherwise the company may experience a decline in the short term after recruiting CEOs with non-MBA master's degree. However, this association can not be generalized to all companies or to all levels of education CEO. However, the ranks of commissioners of the company trying to give specific requirements for executive education in order to obtain a potential CEO. The findings of this study revealed the fact, when education plays an important role in the CEO recruitment process, it would not affect the company's performance over the long term.

"Education does not have much effect on corporate performance. So why the commissioner of such companies consider it in the evaluation process? "Said Bolton. According to Bolton, maybe it is because when hiring the CEO, the company has little identification and measurement criteria used. Of course, because it is related to who would menakhodai company. Therefore, the recruitment process was to consider a variety of fairly stringent requirements, particularly in terms of managerial skills. Interpersonal skills, leadership and strategic vision is a necessary condition that must be owned by the CEO. However, for this one quite difficult to get the size. Commissioner ranks companies finally make an assessment on work experience, track record (track record), and the education of a CEO.

Nevertheless, Bolton noted in this study. First, this study only considers education CEO. Not consider the entire management team, including managers and other directors. It is quite possible that a company with a management team that has a high quality education that will be able to have better performance than not. Second, this study did not distinguish between types of university degree for S1 or S2.