What's in an education? Implications of CEO education for bank performance

Exploiting a unique hand-built dataset, this paper finds that CEO educational attainment, both level and quality, matters for bank performance. We offer robust evidence that banks led by CEOs with MBAs outperform their peers. Such CEOs improve performance when compensation structures are geared towa...

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Bibliographic Details
Published in:Journal of corporate finance (Amsterdam, Netherlands) Netherlands), 2016-04, Vol.37, p.287-308
Main Authors: King, Timothy, Srivastav, Abhishek, Williams, Jonathan
Format: Article
Language:English
Subjects:
Bank performance
Banking industry
Banks
Business models
CEO compensation
CEO education
Chief executive officers
Education
Educational attainment
Executive compensation
Financial performance
Studies
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Summary:Exploiting a unique hand-built dataset, this paper finds that CEO educational attainment, both level and quality, matters for bank performance. We offer robust evidence that banks led by CEOs with MBAs outperform their peers. Such CEOs improve performance when compensation structures are geared towards greater risk-taking incentives, and when banks follow riskier or more innovative business models. Our findings suggest that management education delivers skills enabling CEOs to manage increasingly larger and complex banking firms and achieve successful performance outcomes. •We examine relationships between CEO educational attainment and bank performance.•CEOs with better quality of MBA education outperform their peers.•CEOs with better MBA education are more responsive to equity/risk-taking incentives.•MBA CEOs adopt riskier/more innovative business models to improve bank performance.
ISSN:0929-1199
1872-6313
DOI:10.1016/j.jcorpfin.2016.01.003