Is education reform an enabler of firm financial performance? A sharp regression discontinuity design in Vietnam

Abstract:

This study investigates whether national education reform can enhance firm performance by shaping the human capital of corporate leaders. Exploiting Vietnam’s 1986 Đổi Mới reform as a quasi-natural experiment, we implement a sharp regression discontinuity design (RDD) using CEO birth year as the assignment variable. Our findings show that firms led by CEOs exposed to post-reform education achieve significantly higher financial performance, with a 1.44% increase in return on assets (ROA) and a 3.63% increase in return on equity (ROE) relative to sample averages. These effects are particularly pronounced among female CEOs, those with postgraduate degrees, and CEOs with equity ownership, indicating that reformera education interacts with both agency incentives and demographic traits. By anchoring CEO characteristics in institutional origins, this study extends the upper echelons and human capital theories, and provides novel causal evidence on how macro-level policy reforms can generate micro-level organizational returns in emerging market contexts.