International Company and Commercial Law Review 2016 CEO-chair duality in Nigerian corporate governance: an institutional theory perspective Kenneth I. Ajibo * Collins C. Ajibo ** Subject: Company law Keywords: Chairman; Chief executive officers; Corporate governance; Nigeria; *I.C.C.L.R. 277 Introduction The issue of having the same individual holding both chief executive officer (CEO) and chair of the board positions (CEO duality) has been a topical debate for many decades in many jurisdictions. 1 The concept of CEO duality refers to "when a CEO also serves as the Chairman of the Board of Directors". 2 In the wake of the 2007–08 financial crisis, calls to separate the chair of the board and CEO roles in corporations have remained on the front burner among scholars. 3 The recommendation that the roles of chair and MD/CEO should be separated first came to prominence in the Code of Best Practice set out in the Cadbury Report in 1992 4 in the UK. 5 Since the Cadbury Commission Report of 1992, there has been a necessity for these positions to be held by different individuals to enhance governance and oversight. 6 In the US, the practice of separating the role of the CEO and chair has become a reality. 7 Unlike most common law jurisdictions with a unitary board system, in continental European countries such as Germany, companies would normally have a dual board structure (co-determination) such as the management board and the supervisory board. 8 The management board, on one hand, is vested with the statutory powers to run the company, including managing its day-to-day businesses, and it is within the purview of the management board to strategise and formulate policies that will guide the company into its future. 9 On the other hand, the supervisory board is usually constituted by many stakeholders, including shareholders/creditors/banks, employees (union groups), suppliers, customers, and government appointees representing the broader segment of society. 10 In line with that, the German corporate governance system mandates the managing board to run the company in the best interests of all stakeholders, and this implies that the interest of the shareholders should only be pursued to the extent that they are not detrimental to the interests of the other stakeholders in the firm. 11 The question of an optimal corporate governance model was manifested in the Nigerian economy in the 1990s, owing particularly to the crisis in the banking sector. However, no serious attention was given to sound corporate governance until 2003, when the Atedo Peterside Committee was constituted to review the corporate governance of the public companies. The review resulted in the adoption of a new code of corporate governance. 12 Similarly, the Bankers Committee set up a sub-committee on corporate governance for banks and other financial institutions in Nigeria—owing to recognition of the critical role of corporate governance *I.C.C.L.R. 278 in the success or failure of companies. 13 Nevertheless, the 2011 Revised Code of Corporate Governance of Securities and Exchange Commission (Revised SEC Code) was particularly important as it pioneered the way for the separation of powers between the chair of the board and the CEO of the same company. 14 The recommendation that the roles of chair and MD/CEO should be separated was guided and influenced by the Cadbury Report of 1992 in the UK. It was envisaged that the incorporation of such separated roles would entrench greater efficiency and better financial performance in the Nigerian corporate governance system. 15 However, the preceding argument on the efficiency and financial performance of firms has been criticised, given the fact that corporate governance is somewhat context-specific, entailing that the institutional environment has a huge role in determining the outcome. This article therefore examines the contending views on the effectiveness or otherwise of the CEO–chair duality regime. It situates the Nigerian reform within the context by drawing attention to how the particularity of the country’s institutional environment may affect the optimal outcome of the CEO–chair duality. The article continues the debate on how best to optimise the separation of the roles of the CEO and chair. It brings fresh perspective to the argument by drawing attention to the Page1