Does Educational Background Affect CEO Compensation and Firm Performance?

The Journal of Applied Business Research, Vol. 27, No. 1, pp. 15-40, 2010

24 Pages Posted: 2 Feb 2011 Last revised: 24 Feb 2011

Terrance Jalbert

University of Hawaii - Department of Business Administration

Kimberly Furumo

University of Hawaii at Hilo, CoBE; University of Hawaii at Hilo

Mercedes Jalbert

The Institute for Business and Finance Research

Date Written: 2010

Abstract

This paper examines the educational background of Chief Executive Officers (CEOs) from large U.S. firms. Forbes CEO compensation lists and Compustat data covering 500 or more firms annually are utilized in the analysis for the period 1997-2006. Universities are ranked based on the number of graduates placed in top CEO positions and of the total compensation their graduates earn as CEO. Results show a select group of schools educate a large proportion of top CEOs. Harvard dominates the CEO market at all educational levels. Results show low correlation between university placement rankings and compensation rankings. Regressions on CEO compensation provide additional insights into CEO compensation determinants. Regressions of CEO educational variables on firm performance measures identify links between CEO education and firm performance. This is the first known paper to examine CEO gender as a determinant of compensation and firm performance. The evidence here provides hiring and compensation committees valuable information on appropriate hiring, retention and compensation strategies. It also provides government officials additional insights for designing appropriate regulations.

Keywords: CEO Compensation, Firm Performance, University Rankings

Suggested Citation

Jalbert, Terrance and Furumo, Kimberly and Jalbert, Mercedes, Does Educational Background Affect CEO Compensation and Firm Performance? (2010). The Journal of Applied Business Research, Vol. 27, No. 1, pp. 15-40, 2010. Available at SSRN: https://ssrn.com/abstract=1752563

Terrance Jalbert (Contact Author)

University of Hawaii - Department of Business Administration ( email )

808-974-7456 (Phone)

Kimberly Furumo

University of Hawaii at Hilo, CoBE ( email )


United States
8089747672 (Phone)

University of Hawaii at Hilo ( email )

200 W. Kāwili St.
Hilo, HI 96720-4091
United States

Mercedes Jalbert

The Institute for Business and Finance Research ( email )

P.O. Box 5569
Hilo, HI 96720
United States

HOME PAGE: http://www.theIBFR.com

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