The Effect of CEO Duality on Financial Performance of Listed Oil and Gas Companies in Nigeria
CHAPTER ONE
Objective of the study
The objectives of the study;
- To determine whether Chief Executive Officer (CEO) duality has any effect on listed oil and gas company’s financial performance.
- To determine the relationship between firm board size and increased performance in listed oil and gas companies in Nigeria.
CHAPTER TWO
LITERATURE REVIEW
Introduction
The agent theory argues that the CEO duality increases the power of the Chef Executive Officer (CEO) on the Board and inhibits the independence and objectivity between the management and the Board and that leads to negative effects on fi rm profitability (Jensen and Meckling, 1979, Fama and Jensen, 1983). Consequently, as a result of lack of independence, the responsibility of the Board in monitor and supervise the management is reduced and the presence conflict of interests increases. Haniffa and Hudaib (2006) analyzed the impact of CEO duality on fi rm profitability, using ROA and Tobin Q as measurements, of 347 Malaysian listed companies. They found that CEO duality has e negative and statistical effect on return on assets ratio (ROA). Therefore, CEO duality increases the power of the individual who is more likely to pursue strategies in personal interests and not in the company’s interest. Tang (2017) analyzes the implications of CEO duality on fi rm performance, measured as total shareholder return, using a sample of 82 listed fi rms from US computer industry. The results showed that CEO duality has a negative effect on fi rm performance. Duru et al (2016) analyzes the impact of CEO duality on fi rm profitability, using ROA, ROE and ROS as measures, on US fi rms from 1997 to 2011 period using the GMM model. Their results suggest that CEO duality negatively influences the fi rm’s profitability and that non-executive directors play a disciplinary role in the entity leading to limitation of management opportunism. Chen (2014) analyzes on a sample of 56 listed companies from 10 European countries such as England, Austria, Italy, Denmark, Germany, France, Netherlands, Luxembourg, Spain and Norway. The results suggest that the CEO duality does not have a significant impact on company performance, measured through profit margin. Arslan et al (2014) analyzed the impact of CEO duality on company performance expressed by return on equity ratio (ROE) and profit margin of 11 listed companies in Pakistan. They have found that the CEO duality has a negative impact on ROE but did not fi nd a significant relationship to the profit margin. Issarawornrawanich (2015) analyzed the implications of CEO duality and Board independence on company performance, measured through return on assets ratio (ROA) and Tobin Q in an emerging country Thailand.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description.
This study was carried to examine the effect of CEO Duality on finance performance of listed oil and gas companies in Nigeria. Listed oil and gas companies in Nigeria form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the effect of CEO duality on financial performance of Listed oil and gas companies in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the effect of CEO duality on financial performance of Listed oil and gas companies in Nigeria
Summary
This study was on the effect of CEO duality on financial performance of Listed oil and gas companies in Nigeria. Two objectives were raised which included; To determine whether Chief Executive Officer (CEO) duality has any effect on listed oil and gas company’s financial performance and to determine the relationship between firm board size and increased performance in listed oil and gas companies in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn Nigeria listed oil and gas companies in Nigeria. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
The corporate governance best practices (Corporate Governance Notification) which requires independent directors to be appointed in the board. Therefore, further study may be conducted on CEO duality on firm performance by controlling the duality for other corporate governance effect, such as outside independent directors. The theoretical foundation such study may be the ‘resource dependence theory’ arguing the presence of outsiders (outside independent directors) in the board will ensure the board independence and such board may enhance organization legitimacy and performance by providing information and resources (Zahra and Pearce II, 1989; Gopinath et al, 1994; Maassen, 2002).
Recommendation
Based on the findings of the study, firms are enjoined to place a remarkable degree of emphasis on the area of corporate governance and to some extent embark on eliminating CEO duality. It is also recommended that a larger data set may result in a different model of the relationship between CEO Duality and Financial Performance of listed oil and gas companies in Nigeria. The inclusion of new corporate governance instruments could result in additional Edgeworth combinations of the internal corporate governance mechanism. Similarly, corporate governance instruments such as capital structure, shareholding by the management, CEO tenure, banking efficiency, political regime and executive remuneration can be used to test the relationship with the financial performance of firms.
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