How Important Is the Educational Capital of Chief Financial Officers? an Examination of Educational Credentials in the Context of Other Attributes (2016)

INTRODUCTIONChief Financial Officers CFOs) have achieved great prominence in the modern corporation (Zorn, 2004). Typically, they possess organizational responsibility for the completeness and integrity of the accounting processes and the fair presentation of financial information provided to investors, regulators, lenders and other stakeholders. Under the Sarbanes-Oxley Act of 2002, CFOs of publicly traded companies became legally responsible for these matters. A CFO is a key member of a company's executive team and is increasingly prominent in corporate strategic decision-making (Johnson, 2015). Therefore, reports of how well compensated CFOs tend to be should be no surprise. Examinations of corporate financial reports indicate that a CFO of a larger publicly traded company typically earns in excess of $1,000,000 a year in total compensation (Willhite, 2012). Achieving the position of CFO is a clear mark of career success for an individual.Given the tendency of Chief Executive Officers (CEOs) to come from other educational backgrounds such as marketing and finance (Jalbert et al., 2002; Bartel and Jackson, 1989), one could assert that the CFO position is the job that a person trained in accounting could reasonably hope to acquire. Therefore, the attainment of these positions should be embraced as a topic for the accounting education literature. Most importantly, the connection between formal education and career success at this level forms an interesting and valuable empirical question. However, educational credentials may just be one element of all the attributes needed to attain career success. Such a successful climb of the corporate ladder may be more indicative of a person's hard work and fortuitous opportunity. CFOs also might be brought into organizations because of high caliber previous work experience. For example, many alumni of large public accounting firms become CFOs by effectively leveraging knowledge obtained from their experience servicing a diverse clientele (Iyer et al., 1997). Nonetheless, educational credentials stand out as a sort of brand capital possessed by aspiring CFO candidates. Educational credentials exert particular importance, if only because they are instrumental in allowing a person to initially acquire a position within the business world that begins the ascent to CFO.Within the set of all the elements that go with the construction of a CFO, how important are educational credentials from top schools? Educational pedigrees might not translate well into the real world, with its premium on hard work, strong commitment and favorable circumstances. If they are essential, why is that the case? For these purposes, two major possibilities exist. Brand name educational credentials may represent an achievement of the best and brightest. Individuals with these credentials may be more able, having achieved the more competitive admissions and earned graduation from elite institutions early in their lives. Working with the raw material, good schools make these people even better. Eventually achieving the CFO position, these individuals can be said to have deserved it as the recipients of the educational preparation available. Alternatively, these credentials may be mostly a symbolic capital that is desired by their employers. In this instance, people fortunate enough to have attended elite schools are not necessarily made differentially better by their training. However, their impressive educational credentials further the impression that the companies that employ such people are being intelligently managed.This paper offers to ask several questions about the role of educational capital as it relates to CFO positions. First, how important is educational capital for this important role in corporate America? Second, is the expression of educational capital in this context uniform, or is it more salient for some segments of the CFO market? Finally, this paper seeks to place brand name educational capital in a context of work experience capital, another major credential that may be of value to CFO careers. …