How CEO education shapes firm investment policy during crisis: evidence from CapEx behavior
Xiaonan Wei
What the paper says
Purpose This paper examines whether CEOs with MBA training adjust corporate capital expenditures (CapEx) differently during macroeconomic crises. It evaluates whether MBA-trained CEOs cut CapEx less aggressively than non-MBA CEOs in periods of heightened uncertainty and assesses how this effect varies with governance strength and investment opportunities. Design/methodology/approach Using a panel of U.S. public firms from 1989 to 2022, we employ a difference-in-differences (DiD) design centered on the 2008–2009 financial crisis and the 2020 COVID-19 shock. The analysis incorporates CEO and firm controls, with heterogeneity tests based on Tobin’s Q and the E-index to capture variation in managerial discretion. Robustness checks include dynamic event-study models and placebo analyses. Findings Firms led by MBA-trained CEOs reduce CapEx significantly less during crisis periods than firms led by non-MBA CEOs. This effect is concentrated in firms with weaker governance and greater investment opportunities. No meaningful differences emerge outside crisis periods or in firms with tight governance constraints. Research limitations/implications The study underscores the need to investigate further how managerial traits influence corporate decision-making in periods of heightened uncertainty. Practical implications For boards and investors, the results indicate that CEO educational background influences investment stability during macroeconomic distress. MBA-trained CEOs may help maintain long-term investment commitments when external conditions deteriorate. Social implications By sustaining investment during crises, firms led by MBA-trained CEOs may support broader economic resilience, helping mitigate the depth of downturns and contributing to faster post-crisis recovery. Originality/value This study provides new evidence on how formal managerial education affects strategic investment behavior during crises. It shows that the influence of MBA training is contingent on governance structures and firm opportunities, offering insights for both behavioral corporate finance and executive selection.
Evidence weight
Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40
| F · citation impact | 0.50 × 0.4 = 0.20 |
| M · momentum | 0.50 × 0.15 = 0.07 |
| V · venue signal | 0.50 × 0.05 = 0.03 |
| R · text relevance † | 0.50 × 0.4 = 0.20 |
† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.