Assessing the impact of chief executive officer financial education on organisational financial performance

Abstract

This research assessed whether the financial education of the Chief Executive Officer ( CEO ) of an organisation has a relationship with the profitability of that particular organisation. The purpose of the study was to explore whether a CEO with financial education is better equipped to enable an organisation to perform financially than a CEO without financial education. The researcher made use of a quantitative study based on 40 of the largest listed organisations on the Johannesburg Stock Exchange. The initial research was based on the type of education of each CEO with a focus on whether or not the CEO had been financially educated. Once this was completed the researcher then made use of the Du Pont Model relating to return on equity in order to assess each organisations relative performance. This assessment was concluded over a four year period. A direct comparison was then completed between the organisations managed by CEOs with financial education and those that were managed by CEOs without financial education. There were clear differences in organisational performance between the CEOs with financial education as opposed to the CEOs without financial education. The findings, however, were not statistically significant and further research in this area was therefore recommended.