Privately educated CEOs seen as ‘safer bet’ by investors, study finds

Privilege being mistaken for competence as study reveals no evidence to suggest companies run by state-educated peers underperform

Chief executives who attended private school are perceived by investors as a “safer bet”, according to a study, despite there being no evidence they perform or behave differently to their state-educated counterparts.

Companies run by privately educated bosses tend to experience lower stock market volatility, even though there are no meaningful differences in their performance, decision-making or crisis management, the research from the University of Surrey found.

The stock volatility at firms led by this group was on average 5% lower, although the study found these executives did not take fewer risks, deliver better results or handle crises more effectively. Instead, the effect was driven by investors’ perception that those with elite backgrounds were more competent or stable.

Investors may be mistaking privilege for competence when dealing with uncertainty, according to the study, published in the journal European Financial Management, highlighting a disparity between how financial markets judge bosses and how those leaders actually behave.