Do CEOs with elite education matter? Evidence from shareholder value in mergers and acquisitions

Thi Bao Ngoc Nguyen, Dun-Yao Ke and Xuan-Qi Su

Pacific-Basin Finance Journal, 2025, vol. 90, issue C

Abstract: This study tests the influence of acquiring firms' CEOs with elite education—graduating from prestigious institutions—on shareholder value in mergers and acquisitions (M&A). Utilizing a manually compiled dataset of Taiwanese firms from 2007 to 2020, we find that firms led by elite-educated CEOs, particularly those with advanced degrees in engineering and technology, experience significantly positive M&A announcement-period returns. These results remain robust across alternative tests, addressing concerns about sample selection and endogeneity. Further analysis highlights that CEO attributes, such as prior M&A experience, shorter tenure, or advanced age, amplify the positive influence of elite education. Additionally, firms led by elite-educated CEOs demonstrate stronger growth opportunities, better credit quality, and lower capital costs, aligning with the Managerial Growth Potential and Trustworthiness Hypothesis. Lastly, elite educational ties between acquiring and target firm CEOs enhance trust and communication, further boosting M&A returns, consistent with the Information Communication Hypothesis. Overall, our pioneering work underscores the critical role of leadership's educational pedigree in driving successful corporate acquisitions.

Keywords: M&A; Elite education; Growth opportunity; Credit quality; Information communication (search for similar items in EconPapers)
JEL-codes: G14 G32 G34 I21 I25 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:90:y:2025:i:c:s0927538x25000058

DOI: 10.1016/j.pacfin.2025.102668

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