The effect of experience, education and political links on firms´ performance: evidence from a Latin American country, the case of Mexico

This paper analyzes the effect of the previous experience, education levels and political links of directors and top executives on their firms’ performance. Some of the main variables of experience come from directors having previous positions, such as CEO or top officer of other firms. Variables in education come from whether they have a bachelor’s degree or a master’s degree, for example. The case of political links analyzes whether top executives and directors have a relationship with politics. Data is constructed from an interview panel with 61 different firms starting in 2013 and ending in 2019. Results are robustly, econometrically examined, and the recorded impact of experience and education are as expected, measured using Tobin’s Q. However, having political links negatively affects firms’ performances in Mexico, due to the level of corruption in this country, so the market takes this fact as a negative, as it is also evidenced in the literature review for the case of Brazil