Chief Executive Officer’s (CEO’s) Educational Background and Firm Performance : An empirical study on Manufacturing and IT listed firms in the Stockholm Stock Exchange

Abstract: In this thesis I examine the impact of the educational background of Chief Executive Officers (CEOs) on firm performance of listed firms in the Stockholm stock exchange. This area of research is important given that researchers in the area of behavioral finance and in management argue that CEO characteristics such as educational orientation, age and functional background influence the way business problems are perceived and the decision making process. The numerous and growing challenges which businesses face, particularly in the area of operations,cost-cutting and production efficiency makes the need to examine how CEO educational background could be beneficial for firm performance very relevant. Particular attention is on listed firms in the manufacturing, oil and gas, energy sector characterized by low instability (turbulence) and the IT industry characterized by rapid growth and high turbulence. Educational background information for 100 CEOs is examined between 2008-2010. The information gathered from the annual reports of these companies, shows that the educational path way for most CEOs in these industries has been an engineering degree. The regression analysis on CEO educational background and firm performance show no significant relationship. More specifically the regression analysis show no support for the assertion that firms controlled by CEOs with an educational background in engineering have a firm performance advantage or outperformed firms controlled by CEOs with other backgrounds such as law ,marketing and finance. In addition, the finding shows no significant relationship between CEO educational level (undergraduate or postgraduate) and firm performance. The analysis thus showed no support for the claim that firms controlled by CEO with a higher level of education (postgraduate degree) had a superior firm performance over firms controlled by a CEO who had an undergraduate degree.