EDUCATION VERSUS EXPERIENCE: WHICH MATTERS MORE FOR INDONESIAN BANK DIRECTORS?
DOI:
https://doi.org/10.25170/jm.v13i2.802Kata Kunci:
Board Of Directors, Education, Experience, Firm Performance, Upper EchelonAbstrak
The purpose of this paper is to assess the effects of board of directors’ education and experience on firm
financial performance. Based on the cross-sectional analysis of 30 publicly-listed Indonesian banks, it is
found that both directors’ education and experience positively influence bank profitability, measured with
Return on Assets ratio. The results of this study support Hambrick and Mason’s Upper-Echelon theory.
Based on the research findings, Indonesian banks are recommended to take experience and education into
account when organizing board members—with more emphasis on the former due to the moresignificant
impact it has. Furthermore, banks should also be encouraged to invest more in their human capital by
facilitating further education of their board members.
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