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Engineering leadership: A human capital, cognitive‐fit, and innovation diffusion perspective on CEO financial performance

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  • Ehsan Danesh

Abstract

This study examines whether CEOs' engineering education is associated with superior firm‐level financial performance and whether the depth of technical education further amplifies this relationship. Drawing on Upper Echelons Theory (UET), Human Capital Theory (HCT), Cognitive‐Fit Theory, and Innovation Diffusion Theory, the study conceptualizes engineering education as a form of task‐specific and cumulative human capital that shapes executive cognition, decision quality, and innovation adoption. Using a six‐year panel (2019–2024) of Fortune 500 firms, the analysis employs correlation and hierarchical regression techniques to assess the relationship between CEO engineering education and three accounting‐based performance measures: Return on Assets (ROA), Return on Equity (ROE), and Net Income Growth. The findings provide consistent evidence that firms led by engineering‐educated CEOs outperform those led by non‐engineering CEOs across all three financial indicators. Moreover, CEOs holding both undergraduate and graduate engineering degrees exhibit significantly stronger performance effects, with higher coefficients and increased explanatory power across regression models. These results suggest that deeper technical education enhances analytical rigor, capital allocation efficiency, and the ability to scale performance‐enhancing innovations. Moving beyond traditional MBA‐centric perspectives, this study contributes to executive leadership and finance research by demonstrating that discipline‐specific and cumulative engineering education represents a meaningful and economically relevant dimension of CEO human capital. The findings offer important implications for executive selection, leadership development, and governance in data‐intensive and technology‐driven organizational contexts.

Suggested Citation

  • Ehsan Danesh, 2026. "Engineering leadership: A human capital, cognitive‐fit, and innovation diffusion perspective on CEO financial performance," Review of Financial Economics, John Wiley & Sons, vol. 44(2), April.
    • Handle: RePEc:wly:revfec:v:44:y:2026:i:2:n:e70040
    DOI: 10.1002/rfe.70040
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