Board Members’ Education and Firm Performance: Evidence from a Developing Economy
Indonesia Financial Services Authority (OJK)
August 4, 2011
Empirical studies focusing on the influence of the educational backgrounds of CEO and board members on firm performance is scarce in the literature. This study makes a contribution by addressing such an issue in the context of Indonesia, a developing country that adopts a two-tier board system. Using annual reports to collect information on the educational qualification of board members, I employ a sample consisting of 160 firms listed on the Indonesia Stock Exchange (IDX). I use four measures of educational qualification in this study, namely postgraduate degrees, degrees obtained from prestigious domestic universities, degrees obtained from developed countries, and degrees in financial disciplines. I provide evidence that the educational qualifications of board members and CEO matter, to a particular extent, for either return on assets (accounting-based performance) or Tobin’s Q (market-based performance). For example, CEOs holding degrees from prestigious universities perform significantly better than those without such qualifications.
Number of Pages in PDF File: 38
Keywords: intellectual competence, educational qualification, educational background, upper echelons, corporate governance, Indonesia
JEL Classification: G34, J24, I23working papers series
Date posted: August 4, 2011
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.407 seconds