The impact of CEO educational background on corporate cash holdings and value of excess cash

Mun, Seongjae; Han, Seung Hun; Seo, Dong-Wook

doi:10.1016/j.pacfin.2020.101339

Cited by 40 publications

(33 citation statements)

References 61 publications

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“…An elite (US-based) educational background positively (negatively) impacts cash holdings but appears to have no effect on the other financial policy-style variables. We view these findings as complementing those reported in Mun et al (2020). Male CEOs operate with lower interest coverage ratios, while internally promoted and CEOs with an MBA credential make larger dividend payouts.…”

Section: Olr Methodology Results and Analysissupporting

confidence: 85%

“…5. As indicated above, we follow Bertrand and Schoar (2003) in this regard. Most recent empirical studies in this genre have tended to be narrower in scope – Custodio and Metzger (2014) and Mun et al (2020) being cases in point.…”

Section: Notesmentioning

confidence: 99%

“…Custodio and Metzger (2014) find that firms led by CEOs with a finance educational background or experience in the financial sector have lower cash holdings, more debt and lower investment cash flow sensitivities. In a similar vein, Mun et al (2020) suggest that corporate financial policy depends on CEOs' educational background, which determines their personal traits and professional career experience, leading to different firm outcomes in terms of cash holdings policy and the value of excess cash. Wang and Yin (2018) document that CEOs are significantly more likely to acquire targets that are headquartered in those states where the CEOs received their undergraduate and graduate degrees.…”

Section: Introductionmentioning

confidence: 99%

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CEO management style: does educational background play a role?

Jaggia

Thosar

2021

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PurposeThe corporate finance literature has largely treated individual managers as uniform entities, leaving unexplained the large heterogeneity in corporate practices. The authors explore whether educational background attributes, such as a bachelor's degree from an elite institution and the field of study, influence CEO management style manifested in objectively measurable outcomes at the firm level.Design/methodology/approachThe authors construct a unique data set from various sources. The management-style variables encompass investment, financial, organizational strategy policy choices, and performance outcomes. They standardize the style variables by industry sector and express deviations from industry means into three categories (low, medium, high). The ordered logit models suggest that educational background attributes influence management style across several dimensions.FindingsThe authors document numerous statistically and economically significant results. For instance, an elite education translates to superior market performance as measured by Tobin's Q. A background in science/technology manifests in more (less) spending on R&D (advertising) and less exposure to financial risk for the firm. The authors also find that gender plays almost no role, while CEO age has a nonlinear influence role in affecting management style.Research limitations/implicationsThe study posits that educational background plays an important role along several dimensions such as skill and character development, signaling and network building. While these effects are difficult to disentangle, they all arguably influence an individual's ability to perform complex tasks such as running a company.Originality/valueThe paper contributes to the growing literature on the drivers of CEO style and performance. Previous studies have examined the role of a CEO's elite educational background on firm performance outcomes and have reported either no or limited association. In contrast, the authors document that an elite education is strongly linked to superior market performance but not to accounting-based performance measures. They also find that CEOs who major in science/technology exhibit markedly different management styles compared to their counterparts with backgrounds in business/economics or the humanities.

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Section: Olr Methodology Results and Analysissupporting

confidence: 85%

Section: Notesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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CEO management style: does educational background play a role?

Jaggia

Thosar

2021

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“…To the best of our knowledge, no prior studies of IC investigated the impact of CEO age and education on ICDs. Recent studies of CG mechanisms argued that CEO age and education are useful variables for enhancing our understanding of firms' disclosure policies and performance (Chng et al, 2015;Chen, 2020;Lee et al, 2020;Mun et al, 2020). For instance, Chen (2020) found that CEO age and education are positively and significantly related to firms' innovation outcomes.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Impact of firm performance and corporate governance mechanisms on intellectual capital disclosures in CEO statements

Mardini

Lahyani

2020

JIC

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PurposeUsing agency theory and impression management theory, this study examines the impact of financial performance (FP) and corporate governance (CG) mechanisms on the extent of intellectual capital disclosures (ICDs) and the three components within the CEO statement – human capital (HC), structural capital (SC) and relational capital (RC).Design/methodology/approachThis study employs a sample of non-financial SPF-120 French listed firms to capture the relevant variables; it collects data for 2010–2017, using a panel data technique to run the random effects regressions.FindingsThe study finds that FP, measured using both market (Tobin's q) and accounting (return on equity and return on assets) indicators, plays a vital role in the extent of ICDs and the three components in the CEO statement published by SPF-120 companies. This confirms its impact on the decision-making needs of stakeholders. Among the CG mechanisms, this study finds that cultural diversity and gender diversity affect some ICD components. Moreover, CEO characteristics such as age, education and role duality affect ICD, while institutional ownership drives the extent of such disclosures.Practical implicationsOur findings have comprehensive implications for managers of French listed firms, the Autorité des Marchés Financiers, and stakeholders in general.Originality/valueThis study provides significant insights by investigating the impact of FP, CG and company characteristics on the extent of the ICDs published in CEO statements.

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“…2 This increase in cash holdings can be understood as Korean firms being more conservative in financial policy after the 1997 Asian financial crisis (Ko and Yoo, 2011). However, it also triggered a debate on the proper level of cash holdings among investors, financial media, and even politicians, leading to the temporary enactment of a corporate accumulated earnings tax from 2015 to 2017 (Mun and Han, 2020).…”

Section: Introductionmentioning

confidence: 99%

Media Coverage and Cash Holding Adjustment*

Cho

Kim

2021

Asia-Pac J of Fin Stud

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This paper investigates how companies adjust their cash holdings in response to media coverage. We find that firms with more media coverage and more negative tone of media coverage move the level of cash holdings faster toward the target level. More importantly, the association between media attention and cash holding adjustment speed is weaker for firms affiliated with business groups, indicating that close relationship between media and business groups impairs the monitoring role of media. These findings support the monitoring role of media in improving the efficiency in cash management.

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The impact of CEO educational background on corporate cash holdings and value of excess cash

Cited by 40 publications

References 61 publications

CEO management style: does educational background play a role?

CEO management style: does educational background play a role?

Impact of firm performance and corporate governance mechanisms on intellectual capital disclosures in CEO statements

Media Coverage and Cash Holding Adjustment*

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