CEO Education and its Contribution to Capital Structure

Abstract

This paper examines the relationship between individual characteristics of management, specifically the formal education of the CEO, and the CEO’s capital structure choices. It is hypothesized that a formal post-secondary education contributes to a CEO’s choice of debt-to-equity financing. Furthermore, this paper investigates how educational components, those being, level of education, university ranking, and discipline of explain differences in capital structures. It is hypothesized that all the educational characteristics contribute to a CEO’s choice of capital structure. Empirical evidence is however inconsistent with the hypotheses put forward in this paper.