The methodology of every research work includes the sources of data, methods of collecting data, and analysis and interpretation of data. To test the hypotheses developed for this research, the quantitative approach with panel data is adopted. It presents the research design, procedures of data collection, the sampling procedure and method of data analysis, and the measurements of the variables. This study investigates the impact of Chief Executive Officers (CEO) duality on the financial performance of commercial banks in Ethiopia on a sample of the data collected from 2009 to 2018. Although the total number of banks in Ethiopia is 17, five of them have not been included in the analysis due to one bank is a development bank and the other four banks are newly established. Therefore, 12 commercial banks are included in this study. This study employed the analysis of regression and correlation. The secondary data collected from the National bank of Ethiopia with banks' financial performance and primary data are collected from each selected bank regarding banks corporate structure. In the present study, accounting-based financial performance indicators are used as dependent variables. The three diverse financial performance pointers used as dependent variables in this study to examine the impact of Chief Executive Officers (CEO) duality on financial performance are Return on Equity (ROE), Return on Assets (ROA), and Net Interest Margin (NIM).
ROEit = α0 + ꞵ1CEO + e
ROAit = α0 + ꞵ1 CEO + e
NIMit = α0 + ꞵ1 CEO + e
ROE stands for Return on Equity, a proxy for banks profitability
ROA stands for Return on Asset, a proxy for bank profitability
NIM stands for Net Interest Margin, a proxy for bank profitability
CEO stands for Chief Executive Officers duality
e stands for the error term
Analysis of Data
Table 4.1 shows that the mean value of the financial performance of commercial banks as measured by ROA is 3.086 percent. This indicates that the sample commercial banks in Ethiopia on average earned Net Income before Tax (NIBT) of 3.086 percent of the total assets. Since ROA indicates the efficiency of the management of a company in generating NIBT from the resources of the institution, the higher ROA shows that the company is more efficient in using its resources. The maximum value of ROA is 6.70 and the minimum value of 0.000. That means the most profitable and least profitable banks among the sampled banks earned 0.067 Birr and 0.00 of net income for a single Birr invested in the assets of the firm respectively. ROA is an essential indicator for a bank as it shows investors how the company is behaving in terms of converting assets into net capital. As a result, it can be inferred that the higher the percentage, the better it is for a bank to generate income from its total assets.
Return on Equity (ROE) is the amount of net income generated by a company as a percentage of its shareholder‘s equity. It measures the profitability of a company by showing how much net profit a company can generate with the money invested by shareholders. The ROE, which is measured by the Net Income after Tax (NIAT) divided by total shareholders’ equity, has a mean value of 24.841 percent. This implies that the sample commercial banks in Ethiopia on average earned 24.841 percent of each Birr invested in shareholders’ equity. Comparing results of the three financial performances as measured by ROE, ROA, and NIM with a mean value of 24.841, 3.086, and 5.198 percent respectively, the sample commercial banks are relatively better on ROE implying that the sample commercial banks are better in utilizing shareholders ‘equity capital. The maximum value of ROE is 77.71 and the minimum value is 0.000. The standard deviation of 12.169 shows that it varies by 12.169 from the average value of 24.841.
Net Interest Margin (NIM) is the third indicator of banks' profitability and growth. It reveals how much the bank is earning in interest on its loans compared to how much it is paying out in interest on deposits. Net Interest Margin (NIM) is the spread of the interest earned and the interest expended by the bank. NIM, which is measured as net interest income‖ divided by the average asset, shows a mean ―value of 5.198 percent. This implies that the sample banks on average earned 5.198 percent net interest income of the total assets. The maximum value is 14.000 percent and the minimum value is 1.200 percent. The standard deviation of 2.484 percent shows that from its average value NIM fluctuates by 2.484. Meanwhile, NIM reflects how the bank covers its cost of service and the profitability of the bank, the higher the NIM show, the higher bank's profit and the more stable the bank is
Table 4.2 shows the descriptive results of independent variable Chief Executive Officers (CEO) duality. When a Chief Executive Officer (CEO) is also the chairman of the board of directors, in addition to leading the firm at the highest level, this is referred to as duality. This independent variable is explained by whether the Chief Executive Officer (CEO) of the bank holds the position of the chairman of the board or not. It is a dummy variable. The value of 1 is given if holds the position of the chairman, otherwise, 0. The mean value of this variable is 0.508 with a maximum of 1.000 and a minimum of 0.000 (dummy variable) disclosing that half of the banks’ chief executive officers hold the position of chairperson in selected commercial banks in Ethiopia. The standard deviation of 0.502 implies that there is no deviation from the average mean. According to , the role of holding the position of chairman of a chief executive officer cannot be effectively performed by the board. The studies  revealed that chief executive officer duality has an unhelpful result on managerial performance.  &  argue that CEO duality may hinder the board's ability to monitor management and thereby increase the agency cost. According to  firms with a separate CEO and chairman consistently outperform firms with combined titles. The study conducted by  investigated the principal-agent conflict and concluded that there is a negative relationship between CEO duality and accounting performance measures in the banking industry.  using a panel of U.S. firms, find that CEO duality has a negative and significant impact on the operating performance of firms when independent directors account for a small proportion of the board. According to  separating the CEO and the chairman would increase the firm's performance since the board would have neutral power to oversee the CEO's duties.
Results of Correlation Analysis
A correlation coefficient in statistics is a quantitative assessment that measures both the direction and the strength of this tendency to vary together. There are different types of correlation that one can use for different kinds of data. For this study, the researchers used the most common type of correlation i.e. Pearson‘s correlation coefficient. The greater the absolute value of the correlation coefficient, the stronger the‖ relationship with the variables (dependent and independent). Table 4.3 shows that Chief Executive Officer (CEO) duality is positively and statistically insignificant relationship with the financial performance of commercial banks as measured by Return on Equity (ROE) (0.013), there is a negative relationship between Chief Executive Officers (CEO) Duality (-0.231) and the financial performance as measured by Return on Assets (ROA). There is a negative relationship between Chief Executive Officer (CEO) duality (-0.043) and the financial performance as measured by Net Interest Margin (NIM).
Result of Regression Analysis
Regression is a statistical method used in finance, investing, and other disciplines that attempt to determine the strength and character of the relationship between one dependent variable (usually denoted by Y) and a series of other variables (known as independent variables). The dependent variables for this study are the financial performance of commercial banks in Ethiopia measured by ROE, ROA, and NIM and the independent variable Chief Executive Officers (CEO) duality. Table 4.4 shows that the Chief Executive Officer in the current study is explained by whether the chief executive officer holds the position of chairperson or not. It is a dummy variable. A score of 1 is given if the chief executive officer holds the position of chairperson, otherwise 0. As presented in Table 4.4, Chief Executive Officer is positively correlated with financial performance as measured by ROE 0.001 and statistically insignificant (p-value= 0.488).
Chief Executive Officer duality is the independent variable in the present study as measured by whether the chief executive officer of the bank holds the position of the chairperson or not. It is a dummy variable. A score of 1 is given if the chief executive officer holds the position of chairperson, otherwise 0. From the fixed effect regression results (Table 4.5), the chief executive officer duality is negatively and insignificantly regressed with the financial performance of commercial banks as measured by return on assets. The coefficient value of chief executive officer (CEO) duality is -0.002 and its p-value of 0.222.
Chief Executive Officer (CEO) duality is explained by whether the chief executive officer holds the position of chairperson or not. It is a dummy variable. A score of 1 is given if the chief executive officer holds the position of chairperson, otherwise 0. Based on the random effect regression model in Table 4.6, the coefficient of the chief executive officer is -0.422 and its p-value of 0.018. This shows that there is a negative and significant relationship between Chief Executive Officer Duality and the financial performance as measured by Net Interest Margin (NIM) of the sample commercial banks in Ethiopia at 5 % of the level of significance. The present study implies that holding all independent variables remain constant, as Chief Executive Officer duality increase by one, financial performance as measured by Net Interest Margin (NIM) of the sample commercial banks in Ethiopia is decreased on average by 0.422 percent.