Does School Matter? An Empirical Analysis of CEO Education, Compensation, and Firm Performance

In this paper the educational background of the Chief Executive Officers (CEOs) of Large U.S. Firms are examined. Specifically, the educational background of CEOs from large U.S. firms, as identified in the Forbes 800 Compensation List, are examined. Information concerning the number of Chief Executive Officers that received their undergraduate and graduate degrees from 463 institutes of higher education are compiled. We find that most CEOs have an undergraduate degree, while about half possess a graduate degree. The results indicate that there are preferred educational backgrounds for selection as the CEO of a major corporation. We also examine how the educational background of the CEO is related to the CEO's total compensation. The evidence indicates that those CEOs that do not have a degree earn significantly more than those CEO's that do have a college degree. We find little evidence that the school attended affects the compensation that the CEO receives. Finally, we examine firm ROA and Tobin's Q based on the educational background of the CEO. We find an association between possession of a degree as well as where the degree was earned and the ROA and Tobin's Q of the firm