Does Education Matters? The Effect of TMT Educational Attainment on Firm Financial Performance

DEFA AYU SAFIRA, Hammad Ul Haq, Ph.D

2020 | Skripsi | S1 MANAJEMEN

In this era of globalization, it is increasingly important to obtain global education exposure. Top Management Team education is seen as an important aspect that can shape the decision making process that leads to better outcomes for the company. Top management team that consists of prestigious university graduates with high level of education is believed to be able to translate tacit knowledge to explicit knowledge that is valuable for the company's performance. Therefore, I proposed that the education level and education quality of BoD will have positive influence on firm's financial outcome. To prove this assumption, I analyzed 88 multinational companies in Indonesia using their annual report. I used quantitative method in which the result of my research will be reported with statistical analysis. Even though, from the basis of my statistical analysis, there is no proof of this assumption, my research provides an insight for the composition of TMT education and other factor that will support the firm's performance in addition to TMT education.

In this era of globalization, it is increasingly important to obtain global education exposure. Top Management Team education is seen as an important aspect that can shape the decision making process that leads to better outcomes for the company. Top management team that consists of prestigious university graduates with high level of education is believed to be able to translate tacit knowledge to explicit knowledge that is valuable for the company's performance. Therefore, I proposed that the education level and education quality of BoD will have positive influence on firm's financial outcome. To prove this assumption, I analyzed 88 multinational companies in Indonesia using their annual report. I used quantitative method in which the result of my research will be reported with statistical analysis. Even though, from the basis of my statistical analysis, there is no proof of this assumption, my research provides an insight for the composition of TMT education and other factor that will support the firm's performance in addition to TMT education.

Kata Kunci : Top management team, TMT Education Level, TMT Education Quality, Financial Performance, Upper Echelon Theory, Human Capital Theory