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MBA Education Has No Long-Term Effect on CEO Performance

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Do CEOs with MBA degrees deliver better shareholder value over the long haul?

Only if you believe last year's news.

A newer study shows just the opposite: that CEOs with MBA degrees do nothing to improve a company's value over the long term. Despite this, corporations continue to hire business school graduates, and no one knows why.

Here's what the report's authors had to say on the matter:
CEO education does not play a distinguishing role in determining a CEO's ability related to enhancing firm performance. It is certainly possible that the CEO's education does have a critical influence in determining whether or not the individual becomes a CEO (or, even earlier, whether or not the individual gets hired into positions that may lead to becoming a CEO). Nevertheless, it is still rather puzzling (at least to us) that education affects CEO hiring decisions even though it has little effect on long-term firm performance.
To be fair, the researchers -- who are from the University of Colorado at Boulder, Georgia State University, and the University of New Hampshire -- did see short-term upticks in operating performance following the hire of a new CEO with an MBA.

Judged against the test of time, however, even Ivy league MBA grads didn't outdo executives who skipped the business school grind. The researchers found only a "weak positive relationship" between CEOs and MBAs from top colleges.
POSITION:  No positions in stocks mentioned.