Do MBAs make better CEOs? When a team of researchers from INSEAD posed this question last year, the answer they arrived at was a resounding yes! CEOs with the degree delivered better long-term shareholder value than those without one. Now comes some new research that calls that conclusion into question.
Researchers Sanjai Bhagat, University of Colorado at Boulder; Brian Bolton, University of New Hampshire; and Ajay Subramanian, Georgia State University, found that “hiring new CEOs with MBA degrees leads to short-term improvements in operating performance. We, however, do not find a significant systematic relationship between CEO education and long-term firm performance. CEO education does not seem to be an appropriate proxy for CEO ability.”
The study examined 1,500 companies from 1992 to 2007 and used several performance metrics including return on assets and stock returns. Among the CEOs for whom educational information was available, about 39 percent had MBAs, and of that group, 63 percent attended a “top 20″ program. While MBAs overall did little to improve firm performance, the researchers found a “weak positive relationship” between CEOs with MBAs from top schools and company operating performance. So which school you attend does matter, just not a whole lot as far as your company is concerned.
Read the full article: Study: CEOs with MBAs Deliver So-So Performance