Nav: Home

Smart staffers: Why educated areas are good for business

September 21, 2017

Athens, Ga. - The key to a thriving business may be the educational level of non-executive employees, according to new University of Georgia research.

Specifically, highly educated employees provide higher quality financial data and are associated with improvements in key areas of business practice, such as mandatory disclosures and management forecasts.

"We find that when companies are located in a place where the workforce is highly educated, they produce better accounting information," said John Campbell, an associate professor of accounting in UGA's Terry College of Business and one of the study's authors. "The employees don't have to be experts in accounting, but if they see something that doesn't look right, they're more likely to say something about it and tell their superiors about it."

Non-executive employees play a large role in generating and reviewing accounting reports, meaning that they could be best positioned to catch errors or fraud, Campbell said.

"After the scandals with Enron and WorldCom, a lot of people were wondering why nobody spotted the fraud," Campbell said. "Auditors seem to catch fraud about 10 percent of the time, and regulators like the Securities and Exchange Commission catch fraud about 7 percent of time. Internal employees, however, catch fraud about 17 percent of the time--as much as the auditors and regulators combined."

Superior internal accounting information improves a firm's external financial reporting in many ways, Campbell said.

"First, if a manager is trying to use internal accounting systems to predict the future, they do a better job when their workforce is more highly educated. They're more accurate with their forecasts, they're less biased, and they're more precise," he said. "Secondly, there are fewer errors in their SEC filings. There's less manipulation in their accounting and fewer restatements, meaning they're less likely to have to go back and correct errors."

The study, published in the Journal of Accounting and Economics, also finds some evidence that when companies move their headquarters to a better-educated area, the quality of their disclosures improves, too.

"A lot of the most-educated areas we examined are college towns, which is not surprising. But they don't make up a large percentage of where companies are actually headquartered. The bigger things driving our results are the metropolitan areas that have better-educated people - Washington, D.C.; Silicon Valley; Boston; Raleigh-Durham, N.C.; Seattle; New York. Companies in these areas produce better disclosures," Campbell said. "Toward the bottom are the lesser-educated areas, like Las Vegas; El Paso, Texas; Los Angeles; Decatur, Alabama. That's not to say that there aren't highly intelligent people there. There are. But the industry in those areas may not necessitate higher education, so the population as a whole has less schooling."

Campbell and his co-authors were inspired to look into the education levels of non-executive employees after reading about political corruption.

"There's a study in political science showing that states that have more educated voter bases have less corruption in their political systems, and we wanted to see if that analogy held in business," he said. "One of the reasons for that might be whistleblowers. In both instances, the better-educated the population is, the more likely there will be a whistleblower if something bad is going on."

Despite not reaping the benefits of a well-educated population, companies headquartered in other areas have a reason to be hopeful, Campbell said.

"Over time, in the big metropolitan areas, education levels are rising," he said. "That seems to hold true no matter where they rank relative to each other."
The research and a full table of cities and their ranking based on average education levels is online at

Contact: John Campbell, 706-542-3595,

University of Georgia

Related Business Articles:

Entrepreneurs have different storytelling styles for presenting business
New pioneering research shows that entrepreneurs communicate to strengthen their professional image and stakeholder relationships -- and avoid blaming others.
Gender quotas in business -- how do Europeans feel?
Despite years trying to bring more women to the top boards of business, the proportion of women on the committees of companies is tiny.
Carbon dioxide capture and use could become big business
Capturing carbon dioxide and turning it into commercial products, such as fuels or construction materials, could become a new global industry, according to a study by researchers from UCLA, the University of Oxford and five other institutions.
How NASA is becoming more business friendly
A new case study demonstrates the steps being taken by the US National Aeronautics and Space Agency (NASA) to make it easier for small businesses and entrepreneurs to understand its needs and do business with it.
Finding the 'Goldilocks' level of enthusiasm for business pitches
Georgia Institute of Technology researchers found how long an entrepreneur displays the highest level of excitement during a pitch also plays a major role in predicting success in receiving funding.
Bosses who put their followers first can boost their business
Companies would do well to tailor training and recruitment measures to encourage managers who have empathy, integrity and are trustworthy -- because they can improve productivity, according to new research from the University of Exeter Business School.
Bacteria rely on classic business model
The pneumonia causing pathogen Pseudomonas aeruginosa has developed a twin-track strategy to colonize its host.
Even small gifts boost business
If a sales agent brings their customer a small gift, the customer is much more likely to make a purchase, a study by the university of Zurich has shown.
Business genius can be taught, study says
How did Steve Jobs do it? What about Whole Foods Market and Starbucks?
Researchers see role of 'imaginativeness' in new business success
Visionary entrepreneurs fare best with not one but three types of imagination: creative, social and practical.
More Business News and Business Current Events

Trending Science News

Current Coronavirus (COVID-19) News

Top Science Podcasts

We have hand picked the top science podcasts of 2020.
Now Playing: TED Radio Hour

There's so much we've yet to explore–from outer space to the deep ocean to our own brains. This hour, Manoush goes on a journey through those uncharted places, led by TED Science Curator David Biello.
Now Playing: Science for the People

#556 The Power of Friendship
It's 2020 and times are tough. Maybe some of us are learning about social distancing the hard way. Maybe we just are all a little anxious. No matter what, we could probably use a friend. But what is a friend, exactly? And why do we need them so much? This week host Bethany Brookshire speaks with Lydia Denworth, author of the new book "Friendship: The Evolution, Biology, and Extraordinary Power of Life's Fundamental Bond". This episode is hosted by Bethany Brookshire, science writer from Science News.
Now Playing: Radiolab

Dispatch 2: Every Day is Ignaz Semmelweis Day
It began with a tweet: "EVERY DAY IS IGNAZ SEMMELWEIS DAY." Carl Zimmer – tweet author, acclaimed science writer and friend of the show – tells the story of a mysterious, deadly illness that struck 19th century Vienna, and the ill-fated hero who uncovered its cure ... and gave us our best weapon (so far) against the current global pandemic. This episode was reported and produced with help from Bethel Habte and Latif Nasser. Support Radiolab today at