Opening the black box of firm performance: the role of CEO's education

Résumé 0

The distribution of firm performance is much dispersed. Rational behind it is still not fully understood. According to upper echelon theory, top managers' personal characteristics de-termine firm-level performance. In the spotlight of research is the role of education, which is often referred as proxy for human capital. I provide evidence that firms managed by CEO with MBA degree are on average 5-7 percentage points more productive. Meanwhile, prestige of education is not important. Cross-sectional dataset combining 18 European countries and 15 sectors allows accounting for unobservables at country-sector level. I also address the gap in the literature by analyzing the impact of different types of education. Evidence suggests that the engineering degree is probably the worse option for CEO. Juridical background has limited positive impact on firm performance. Education in economics, finance, accounting, marketing, or fine arts has no effect.