The Chief Executive Officer (CEO) of a corporate entity is its Chief Accounting Officer and head of management. According to Miller (2005), management is more of a hands-on activity, involving conducting and supervising actions with the judicious use of means to accomplish certain goals. In the context of the Nigerian Stock Exchange (NSE), the CEO plays a pivotal role in steering the institution, championing the development of Africa’s financial markets, and restoring investor confidence.
CEO Duality and Corporate Governance
The Chairman of the Board of Directors, on the other hand, is the chief policy or law maker of the enterprise. CEO Duality occurs when the CEO is also the Chairman of the company or Board of Directors. Since the position of a CEO is a critical element of corporate governance of a company, a combination of the roles of CEO and chairman of the company could have far reaching implications on stewardship accounting and corporate governance and by extension corporate performance.
Poor corporate governance has been implicated in most corporate failures in and outside Nigeria. Hence this paper appraises the practice of CEO Duality in Nigeria and examines its implications on effective corporate governance and performance of Non-Financial companies in the Nigerian Stock Market. It uses panel data on the performances (ROE) of companies with CEO-Duality and those without CEO-Duality to determine the effect of this duality on company performance.
A sample size of 30 companies selected through the Taro Yameni formula was used while their performances (ROE) for the years 2006 to 2010 were equally used without further sampling. A test of significant difference was performed using the E-view statistics. It was discovered that there is a significant difference between the performances of companies with CEO duality and those without CEO duality.
Again the average performance of the former was statistically and significantly lower than the average performance of the later. It was therefore recommended that as a veritable means of strengthening corporate governance and enhancing performance, CEO duality should be minimized/reduced as much as possible. Chairmen of companies should not double as Chief Executive Officers.
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Key Findings on CEO Duality
- There is a significant difference between the performances of companies with CEO duality and those without CEO duality.
- The average performance of companies with CEO duality is statistically and significantly lower than those without.
- CEO duality should be minimized to strengthen corporate governance and enhance performance.
Key words: Chief Executive Officer, Chairman of the Board, Stewardship Accounting, Corporate performance.
Oscar N. Onyema: A Profile of Leadership and Innovation
Oscar N. Onyema OON (born 19 August 1968), is the immediate past Group Chief Executive Officer of Nigerian Exchange Group Plc (formerly known as the Nigerian Stock Exchange), an institution that services the largest economy in Africa and champions the development of Africa’s financial markets. Prior to attaining this position, he was the CEO of The Nigerian Stock Exchange (“NSE”) for 10 years. He has widely been recognized as an agent of change in restoring and growing investors’ confidence and advancing Nigeria’s capital markets towards a path of sustainable growth and development.
Onyema is the Chairman of two affiliate companies: Central Securities Clearing System Plc (CSCS), the clearing, settlement, and depository for the Nigerian capital market; and NG Clearing Limited, which is the premier Central Counter Party Clearing House (CCP) in Nigeria.
Oscar Onyema was born in Nigeria, to the family of His Royal Majesty Eze V. B. C. Onyema III, the Eze Onyema III of Ogwu-Ikpele. He received his bachelor degree in Computer Engineering from Obafemi Awolowo University, Ile-Ife, Nigeria and an MBA in Finance and Investments from Baruch College, New York City. He attended Harvard Business School's six-week Advanced Management Program.
Prior to attaining this position, he was the CEO of The Nigerian Stock Exchange (“NSE”) for 10 years, where he launched a ‘Transformation Agenda’ that revamped the Exchange into a globally competitive securities exchange. He implemented several innovations centered on technology, product development and market infrastructure in Nigeria and across Africa, whilst driving stronger regulation and operational efficiencies market-wide, in an effort to develop a more robust and transparent global African capital market.
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Onyema has served as Senior Vice President and Chief Administrative Officer of the American Stock Exchange (Amex), which he joined in 2001. He was the first person of colour to hold that position. He was instrumental in integrating Amex equity business into NYSE Euronext after its acquisition of Amex in 2008. In 2009, Onyema founded Market Strategists LLC and consulted under the Gerson Lehrman Group platform in the United States.
The Securities and Exchange Commission (SEC) of Nigeria, on 18 January 2012, approved the appointment of Oscar N. Onyema served as the Senior Vice President and Chief Administrative Officer at American Stock Exchange (Amex), which he joined in 2001. He was the first person of colour to hold that position, and was instrumental in integrating the Amex equity business into the NYSE Euronext equity business after their acquisition of Amex in 2008.
Onyema is also the Chairman, West African Capital Market Integration Council; Chairman of Central Securities Clearing System (CSCS) Plc., the clearing house for the Nigerian capital market; Council member of the Chartered Institute of Stockbrokers of Nigeria (CIS); President of the African Securities Exchanges Association, and a Global Agenda Council member of the World Economic Forum. Onyema on the international front, occupies a seat on the London Stock Exchange Group Africa Advisory Group (LAAG).
The Abuja Chamber of Commerce and Industry in January 2015 awarded, Oscar N. Oscar N. Onyema holds the traditional title of Öchiligwe of Ogwu-Ikpele and founded the Oscar N. Onyema foundation.
Strategic Initiatives and Vision
Earlier in 2018 we announced our strategic plan for 2018-21, which calls for the NSE to pivot towards a more customer-centric business model. Through the use of data analytics we aim to fully understand the demand for new products, and thus improve on our previous strategy of focusing on the types of products that emerging markets traditionally provide. It is important to understand local cultures, norms and interests. For example, securities lending and short-selling products, which have been on the market since 2013, have failed to attract sufficient attention.
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Some of this low activity can be explained by factors including the lack of collateralisable assets held by agri-businesses; an underdeveloped SME ecosystem that requires education about corporate governance; and the need to communicate more clearly that one of the most viable ways to raise capital is through capital markets.
Financing is key to closing Nigeria’s infrastructure gap, and capital markets are a viable platform for raising funds for projects. Under the Pensions Reform Act of 2014, pension funds are allowed to invest 5% of their assets in infrastructure projects, which they can do through the capital markets. The introduction of the green bond has been significant, as a lot of the funds that go into them finance environmentally sustainable infrastructure.
The country’s financial technology industry has a lot of potential. It has garnered global recognition and as a result attracted high-profile investments. The next step is to begin to examine technologies such as blockchain and artificial intelligence. The NSE has taken various steps to drive innovation, including moving from paper records to a fully digitised environment. Discussions are ongoing about the possibility of a digital initial public offering platform, which would let people across the country raise capital using their smartphones. Technological innovations such as these will create new ways to perform the same tasks more efficiently.
Governance is key to creating sustainable growth. For this reason, most of the work we have done on sustainability is in this area. We have developed the Corporate Governance Rating System, through which over 350 directors have been certified and also made aware of their fiduciary responsibilities. For the NSE’s largest listed companies with the highest levels of corporate governance there is the Premium Board, which is attracting the large-portfolio investors.
CEO Duality in Corporate Governance: Should the CEO Also Be the Chairman of the Board?
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