Does the CEO elite education affect firm hedging policies?

Boubaker, Sabri, Clark, Ephraim A. and Mefteh-Wali, Salma (2020) Does the CEO elite education affect firm hedging policies? The Quarterly Review of Economics and Finance, 77 . pp. 340-354. ISSN 1062-9769 [Article] (doi:10.1016/j.qref.2019.11.004)

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Abstract

This paper studies the relationship between CEO elite education and firm hedging decisions. It uses the particular specificities of the French post-secondary educational institutions to examine the effect of CEO educational background on the use of foreign currency derivatives. The results show a positive and significant relationship between education quality and derivatives use. Neither the level nor the type of education has any significant effect. The results also show that the use of derivatives enhances firm performance only when CEOs are from elite institutions. These results are robust to a battery of tests that involve alternative estimation techniques, the use of different subsamples, additional control variables, and control for endogeneity and selection bias.

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