Top Management Teams and Total Shareholder Returns

The Association Between Top Management Team Education

by Emmanuel Kintu

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Synopsis

This study examined the relationship between the education heterogeneity of top management teams and organizational performance measured as long-term total shareholder returns. The subjects were 46 publicly traded North American insurance companies that had been traded for at least five years. I employed two metrics to measure education heterogeneity. One metric assessed the education heterogeneity of top management teams based on the highest education certification and the other metric assessed education heterogeneity of the teams based on all education certifications, and therefore the underlying disciplines, represented on the top management teams.

Controlling for team size, I found that individually the education heterogeneity metrics are poor predictors of organizational performance. The metric based on the highest education certification found no support as a predictor of organizational performance while the metric based on all education certifications found moderate support. However, in the full model, when used together the two metrics constituted a good predictor of organization performance.

A second finding was that in the publicly traded North American insurance companies, including a combination of actuarial certification and the Master of Business Administration degree on the top management team results in superior organizational performance as measured by long-term total shareholder returns.

The results suggest that all education certifications, not just the highest education certification, each top manager brings to the top team should be considered when assessing the education heterogeneity of a top management team. The results also suggest that before a top management team is assembled, the critical education requirements of the industry should be established and inclusion on the top team ought to be based on how each selected top managerÍs education certification(s) enables the team to deliver superior long-term performance.

About the Author

Emmanuel Kintu is an insurance executive with 11 years of experience in the industry. He is currently the vice president of Reinsurance Group of America Incorporated (RGA) responsible for coordinating the integration of front and back office efforts to ensure that RGA’s clients are served effectively and profitably. He also advises RGA’s clients regarding reinsurance administration. Prior to his current position, Emmanuel was responsible for reinsurance administration. He transferred to RGA, in 1996, from General American’s Group Line where he directed the Preferred Accounts Group Life and Health benefits department. Prior to that, he directed the General American’s Los Angeles (California) Regional Claims office where he pioneered the Customer Focused Team approach to serving large multi-site clients.

Emmanuel served on General American Life Insurance’s Managing Diversity Taskforce for eight year and chaired the steering committee for four of the eight years. He helped found the Civic Progress Companies Diversity Officers Network. He serves on the board of the St. Louis Black Repertory Company, and Co-chairs FOCUS St. Louis’s Bridges Across Racial Lines program. Emmanuel is also a founding member of the Life Office Management Association, Inc (LOMA) Reinsurance Administration Professional’s Committee.

A graduate of the 1998-1999 Leadership St. Louis program, Emmanuel earned a Doctor of Management degree from Webster University, a Master of Business Administration degree from Saint Louis University, and a Bachelor of Arts degree in Political Science and Public Administration from Makerere University. He is a Health Insurance Associate and a certified Development Dimensions International Instructor.