Finance Executive Education


A survey by recruiters Robert Half found that over half of FTSE 100 CEOs had a background in finance. This suggests that an understanding of finance is greatly valued as a leadership trait across all industries.

Executive education programmes in finance, such as Imperial’s Foundations of Finance programme, are frequently sought out by senior executives wanting to step up to board or senior management positions.

I led a study into the impact of a similar programme and found that not only did it increase executives’ financial competencies, but it also led to improved firm financial policies and performance.

Measuring the impact of executive education

In collaboration with Dr Diogo Mendes from the Nova School of Business and Economics and Professor Daniel Metzger from the Rotterdam School of Management, I explored how an 18-hour corporate finance executive education programme impacted executives’ performance.

Between June 2015 and April 2019, we conducted a study involving 93 executives in Mozambique’s capital, Maputo. Most participants were leaders of medium and large-sized organisations with more than 40 per cent educated to Master’s level or above. We compared the performance of executives who had completed a finance executive education programme, delivered by Imperial, and those who were to complete the same programme only at a later stage.

The study made three particularly striking conclusions:

  1. There is a link between the financial skills of leaders and the financial techniques they use at work.

We wanted to establish if there was a link between an executive’s knowledge of finance and their confidence in implementing financial decision-making techniques. To do this, we surveyed the financial knowledge and financial techniques employed by participants before the executive education programme was delivered.

Our survey found that executives without a finance background were less likely to use techniques to compare and evaluate potential financial returns from investments (such as Net Present Value) and less likely to use techniques used to model how financial uncertainty might affect a business (such as Scenario and Sensitivity Analysis).

This finding suggests that executives without a finance background could be making financial decisions without a thorough understanding of the potential impact of these decisions.

  1. Executives changed their companies' financial policies as a result of attending the executive education course.

We also wanted to measure the impact of the executive education programme on the participants. We surveyed participants after the executive education programme to find out whether the programme had changed their approach to determining company financial policies.

We asked if participants intended to act to improve the operational efficiency and financial health of their companies as a result of the course. Most stated that they intended to adjust how their organisation managed working capital (the policies that ensure a company has sufficient resources to meet its short-term operating costs and short-term liabilities) and risk management policies (how a company decides on and monitors financial risk). Furthermore, 42 per cent said they would adapt their valuation techniques (the techniques they use to decide whether or not an investment will deliver financial value for the company) and almost half responded that they would update their capital structure as a result of attending the programme (capital structure refers to how a company is financed and in particular the balance between debt and equity).

It was also very rewarding to find that many of the executives followed through with their intentions to make changes.

In particular, we found that 15 months after the programme, nearly a third of those surveyed reported that they had changed their approach to managing working capital as a result of what they learned on the course to improve the operational efficiency of their businesses.

These results suggest that participants gained from the programme the confidence and knowledge to change their approach to financial decision making. 

  1. The overall performance of the companies led by managers who had attended the executive education programme also improved.

Finally, we wanted to see if investing in developing leaders’ financial skills could improve company performance as a whole.

We focussed on two commonly used measures of company financial efficiency: Return on Assets (ROA) and Return on Invested Capital (ROIC). These show how efficient a company is at earning income given the amount of assets it has and the amount of money invested in the company. 

Analysing financial statements throughout the study, we found that the companies led by executives who had been on our course saw greater ROA and ROIC performance in comparison to control firms. With our research design, we were able to rule out other factors which can lead to improvements in these measures (for example a sudden spike in sales due to a demand shock can increase income and reduce stock leading to a better ROA figure).  We concluded that the improvements we observed in company performance were most likely a result of the companies adopting different financial policies such as funding growth in more effective ways. 

This finding suggests that company performance as a whole can be improved by investing in the financial expertise of senior executives.

What this means for managers and leaders

Our results show that relatively short and low-cost interventions, such as executive education course on corporate finance and risk management, can improve executive financial decision making.

Executive education short courses may therefore benefit experienced executives who are seeking to advance their careers by gaining greater confidence in making financial decisions.

You can read Dr Custódio’s full paper here.

A popular solution for executives looking to improve their financial knowledge is an intensive short executive education course, such as Imperial’s Foundations of Finance programme. This five-day programme gives participants the essential foundations required by leaders and managers to make sound financial decisions. It is taught by Imperial’s top finance faculty including Dr Cláudia Custódio, Associate Professor of Finance, who was recently awarded a highly sought-after European Research Council Starting Grant recognising her achievements as an exceptional early-career researcher.


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About Cláudia Custódio

Associate Professor of Finance
Cláudia Custódio is a Professor of Finance at Imperial College Business School, London. Previously she was an Assistant Professor at Nova School of Business and Economics in Lisbon and Assistant Professor at Arizona State University.

Cláudia Custódio received her B.A. in Management in 2002 and a Masters in Finance in 2004 from ISCTE Business School in Lisbon, Portugal. In 2010 she received her Ph.D. from the London School of Economics and Political Science. At the London School of Economics she was affiliated to the Financial Markets Group, where she is now a research associate. Previously she has worked in financial auditing and management consulting.

Custódio’s research interests are mainly in corporate finance, including corporate diversification, mergers and acquisitions, capital structure and risk management.

She has taught corporate finance at the undergraduate and graduate levels in Portugal, Mozambique, the UK and the US. She is also the co-author of a Corporate Finance text book in Portuguese, “Finanças da Empresa”, which is the best seller book in this topic in Portugal since 2007.

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