The MBA degree turned 111 this year. How is it doing? Great for those who hold the degree from top business schools; not so much for the businesses they run, according to a study by the Institutional Investor. The cult of the MBA CEO has led to huge increases in executive pay but not profit gains:According to data from the Stanford Graduate School of Business, average CEO compensation at the largest firms rose from $1.8 million per year in the 1980s — roughly in line with the previous 45 years — to $4.1 million in the 1990s. By the early 2000s, it had risen to $9.2 million. And those numbers are after adjusting for inflation...
We found no statistically significant alphas — despite testing every possible school with a reasonable sample size. MBA programs simply do not produce CEOs who are better at running companies, if performance is measured by stock price return...
