Effects of CEO education background on firm performance

This paper examines the impact of CEO education on firm performance with the data of Chinese publicly listed firms from 2003 to 2012. After addressing the endogneity in the CEO education variable with the instrumental variables of the college entry exam rate in China's different provinces in different years, the impacts of cultural revolution on CEO education, and the growth environment of the CEO, the authors find that excellent CEO education can significantly enhance firm value, but cannot significantly affect firms' accounting profitability and growth rate. These findings suggest that a CEO with high education background can enhance the expectation on the value of the firm from investors; however, CEO education may not be helpful for improving firm accounting performance in the short run. ©, 2015, Press of Tsinghua University. All right reserved.