Engineer CEOs and Firm Performance in BIST Manufacturing Firms

Abstract

We study the relation between the educational background of chief executive officers (CEOs) and firm performance for firms traded on Borsa Istanbul (BIST) between 2009-2015. We focus on manufacturing firms and analyze two different measures of performance, namely operating performance and market-based performance. We find that firms that have CEOs with an engineering background experience higher operating performance measured by return on assets (ROA) than firms that have CEOs with other educational background. Moreover, firms with engineer CEOs also experience better market-based performance measured by Tobin’s Q. The positive association between having CEOs with an engineering background and firm performance that we document is robust to the inclusion of several firm-level control variables in our multivariate analysis. We also find that this positive relation is more pronounced for public manufacturing firms of smaller size.

Keywords: Chief Executive Officer (CEO), Educational Background, Engineering, Firm Performance, Borsa Istanbul

JEL Classification: G30, G34