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The Impact of Financial Education of Executives on Financial Practices of Medium and Large Enterprises

Swedish House of Finance Research Paper No. 20-29

85 Pages Posted: 18 Sep 2019 Last revised: 2 Nov 2022

See all articles by Claudia Custodio

Claudia Custodio

Imperial College London; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Diogo Mendes

Stockholm School of Economics; Swedish House of Finance

Daniel Metzger

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); European Corporate Governance Institute (ECGI); London School of Economics & Political Science (LSE) - Financial Markets Group

Multiple version iconThere are 2 versions of this paper

Date Written: October 31, 2022

Abstract

We study the impact of an MBA-style executive education course in finance for top managers of medium and large enterprises on firm policies and performance through a randomized controlled trial (RCT) in Mozambique. We find that executives change firm financial policies in response to the treatment. A reduction in working capital generates an increase in cash that is used to finance long-term investments. Those changes improve the performance of the treated firms. Our experimental evidence shows that individual managers and their skills matter for firm behavior and economic performance.

Keywords: Financial Literacy, Financial Education, RCT, Financing Constraints, CEOs, Executives

JEL Classification: D4, G30, J24, L25, M41, O16

Suggested Citation

Custodio, Claudia and Mendes, Diogo and Metzger, Daniel, The Impact of Financial Education of Executives on Financial Practices of Medium and Large Enterprises (October 31, 2022). Swedish House of Finance Research Paper No. 20-29, Available at SSRN: https://ssrn.com/abstract=3450851 or http://dx.doi.org/10.2139/ssrn.3450851

Claudia Custodio

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Diogo Mendes

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm
Sweden

Daniel Metzger (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

London School of Economics & Political Science (LSE) - Financial Markets Group ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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