CEO Education-Performance Relationship: Evidence from Saudi Arabia

Abstract

The study investigates the association between CEO education and firm performance with a sample of 85 nonfinancial firms listed on the Saudi stock exchange during 2018 applying ordinary least squares method. CEO education is defined by three variables, the level of education, if the degree-granting institution is domestic or foreign, and if the highest degree is in management or other fields of study. Financial performance is measured by return on assets and return on equity. Firm size, age, liquidity and growth are introduced as control variables. The study shows that 58 CEOs of the firms studied are graduates, 38 have obtained their degree from a domestic institution and 44 have a management degree. Graduate CEOs are found to enhance performance. Graduating from a domestic institution influences performance positively. Management degree of CEO does not seem to impact performance. Firm size, liquidity and growth are positively associated with performance. Firm age does not explain performance differences of firms. Results are robust to performance measures. The findings of the study suggest that firms can benefit from a CEO hiring policy that emphasizes on the minimum qualification set as graduation or higher, education from a domestic institution and no undue weight on management qualification.

The Effect of Intellectual Capital and Board Characteristics on Value Creation and Growth

“…According to the findings of the first set of hypotheses, comprising the first and second hypotheses, diversity of board members' education is not likely to improve the firms' performance. However, the underlying theory and previous papers, including [35][36][37][38][39], noticed that the existence of educated managers, with the fields of study related to the company's activity, has a positive and significant impact on firm value creation. This is by in-depth analyses, a wider range of knowledge in the firm's activity that educated boards' members possess.…”

“…Olayinka et al [36] emphasize the relevance of financial education for board members in improving firms' performance. Altuwaijri and Kalyanaraman [37] show that graduated CEOs contribute to firms' performance more significantly than less educated ones. Saidu's [38] findings indicate that CEO education improves a firm's profitability.…”

The Moderating Role of Ownership Concentration on the Relationship between Board Composition and Saudi Bank Performance

“…Third, to control for potential omitted variable bias (Gujarati, 2003;Wooldridge, 2010) and to rule out alternative explanations for the mean results (Singh et al, 1986), the current study includes a number of control variables for board characteristics (board activity), ownership structure (government ownership), and firm-specific characteristics (bank size, bank profitability) (refer Table 1). There are extensive theoretical and empirical research that suggest a significant impact of these variables on firm performance (e.g., Ali et al, 2019;Altuwaijri & Kalyanaraman, 2020;Bennouri et al, 2018;Hamdan, 2018;Harymawan et al, 2019;Latif et al, 2020;Uribe-Bohorquez et al, 2018).…”

The Influence of the Debt Ratio and Enterprise Performance of Joint Stock Companies of Vietnam National Coal and Mineral Industries Holding Corp.

“…X are variables of control that affect the performance of the company. Based on the literature studies (Altuwaijri & Kalyanaraman, 2020;Rahman & Saima, 2018), the variable control include: Free cash flow (FCF), Company size (Size), Growth opportunity (Growth), Investment opportunities (TobinQ), Operating costs to sales ratio (Oper), Time of years of enterprise Establishment (Year) (see Table 1).…”