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The price of a company stock is an indication of the performance of company where stock is properly priced, investors can invest in the most profitable companies based on the stock prices of the companies.

It is in line with the foregoing that the researcher has decided to appraise the efficiency of stock pricing on the Nigerian Stock Exchange

In doing thus, the researcher adopted the historical and descriptive methods of research. Data was sourced through the use of interviews, questionnaires and journals. The chi-square techniques of data analysis was employed in conjunction with percentage and tables.

Based on the analysis carried out, it was found that stock on the Nigerian Stock Exchange were efficiently priced.

The findings reveal that the Nigerian Stock Exchange is faced with a number of problems such as, the retention attitude of Nigerian investors and also the problem of  an underdeveloped financial system and finally the oligopoly structure of the NSE does not augur well for competition and development.

Recommendations made include the need for government to pursue its current privatization process with more vigor, and that there should be a significant lowering of corporate tax rates on publicly quoted companies, which increase public confidence in the Stock Market, to mention but a few.        




For any economy to remain afloat in it’s bid for survival in today’s globalization, deregulation and liberalization of markets, it needs to have an efficient financial system to direct the allocation of its resources capital markets and institutions, of which the stock exchange is an integral part of have become of, paramount importance in a dynamic economy as Nigeria.

The capital market is a sub-set of financial system that provides the accelerated growth of the economy. This it does by efficiently channeling fund from investors into productive sectors of the economy. It serves as an avenue for government and companies to raise long-term funds to fiancé their activities.

The capital market consists of a network of institutions and individuals comprised of regulators and operators who, together, facilitate the smooth operation of the market. In other words, the capital market comprises, providers of funds (investors), users of funds (companies and governments), intermediaries (stock brokers, issuing houses, registrars) and regulators (SEC, the Nigerian Stock Exchange and Central Bank of Nigeria).     

The Nigerian Capital Market is made up of basically two components the primary and secondary market. The initial sale of securities from the issuing corporation or government to the investor is done in the primary market. The issuers uses the funds raised to expand production, build infrastructures and the like very few investors can be persuaded to tie up their funds indefinitely. Therefore, securities are usually negotiable,   enabling the initial buyers to re-offer the securities to any interested party at any prices which is mutually satisfactory. It is, therefore, a function of securities exchange to provide an arena where such mutually satisfactory prices may be determined. It is in the regard that it becomes important to analyze the stock pricing function of the Nigerian capital market. 


As a result of both institutional and individual investors staking out their hard earned money in order to earn a reasonable return on securities  acquired in companies, it would be necessary to know whether the shares and securities acquired in companies quoted in  the Nigerian Stock Exchange are property priced. However, there is great need to critically consider the following relevant problems as regards the research topic:

a.           Lack of information from listed companies

b.           Lack of knowledge of the operations and functions of the stock exchange.     

c.           Difficulty in obtaining quotation in the stock exchange

d.           Lack of clear understanding of the pricing of shares and securities in the Nigerian Stock Exchange  


As the topic suggest, this study focuses on the pricing function of the Nigerian Capital Market.

Therefore, the study confines itself to history, operations and functions of the Nigerian capital market in relation to stock pricing.

In so doing, the Nigerian Stock Exchange (NSE) will be used as a case study. It would cover the period between 1996 to 2000.


This study would be significant to the following people and in the following ways:

i.             This study would be of great benefit to market operators like  the stockbrokers, issuing houses and their likes, as it would bring out their short coming in the area of pricing of securities.

ii.            It would also be valuable to public investor as it would enlighten them on stocks to invest in.

iii.           The study would also be significant to students of fiancé, accounting, economies and business administration, as it would educate them on the pricing function of the Nigerian capital Market.

iv.          The study would assist policy makers in the Nigerian Capital market in developing strategies that would improve pricing efficiency and thereby improving the general efficiency as a result.  


In the light of the pervasive ignorance shrouding the operations of pricing in the Nigerian capital Market, this study is set to achieve the following specific objectives:

a.           To appraise securities pricing in the Nigerian Capital Market

b.           To evaluate the various methods used in price determination of shares and securities.

c.           To inquire into the efficiency of the market for securities.

d.           To determine the trend of share prices on the Nigerian Stock Exchange (NSE)

e.           To inquire into the factors that solely determine the prices of securities in the Nigerian Capital Market.    

f.             To find solution to obstacles facing pricing of securities  on the Nigerian Stock Exchange.


For the purpose of this research work, it is desirable to test the hypothesis so as to make valid conclusions to either accept or reject the assumptions on the following basis.

Ho: Securities in the Nigerian Capital Market are not efficiently priced.

Hi: Securities in the Nigerian Capital Market are efficiently priced. 


This research work will attempt to answer the following questions:

(i)           How fair are prices of securities in the capital market?

(ii)          How relevant are the method of pricing securities used in the Nigerian Capital market in relation to other methods available?

(iii)        How fast does security prices response to available information on companies performance and the state of the economy.

(iv)        To what extent do public investors place reliance on prices of securities in this market.

(v)         What correlation  exists between prices of securities and companies levels of economic activities.



This refers to the market where, the purchase and sale of securities takes place. It has three dimension i.e the capital market, money market, and secondary market. 


This is the market for long term capital i.e long term financing assets. It is a market where long term financing assets are traded including preference and common stock debentures and bonds.


This refers to the new issues market when a firm issues new securities either bonds or common stock, the securities are sold in primary market since they are new issues. Once  the securities have been sold, any  future sales occurs in the secondary market. The primary market also exists  in the money market.


This is the market which exist as a result of future sale of  securities which had initially been traded upon in the primary market.


This is the raising of more funds by quoted companies through special issues of shares to existing shareholders of the issuing company. It is typified by the on going privatization  exercise.


This project is organized into five chapters

Chapter one: which is the introductory chapter present general overview information about stock pricing in the Nigerian Capital Market, statement of the problem which the study is set to address. The scope, significance and objectives of the study, and also looked at the basic hypothesis of the study, both the Null (Ho) and the Alternate (HI).

Furthermore technical terms that will be used in the course of reporting the finding of this research  are also defined.      

Chapter two: reviews relevant existing literatures which focuses on the history, structure, regulatory environment and functions of the Nigerian Capital Markets. The securities and exchange Commission and the Nigerian Capital Market operators.   

Chapter three: tagged research methodology, outlines the various methods  used in data collection, the analysis, techniques and justification  of there techniques.      

Chapter four: presents the data obtained during the research and their analysis, it also provides answers to the research questions that were stated under the statement of the problem.

Chapter five: takes into cognizance the summary, conclusion and recommendations derived logically from the study. Limitations of the study and areas of further research were also noted.


1.      Yisa A.K (2001)  :                   The role of the Nigerian Stock

Exchange in Nigerian Economic Development (Unpublished B.Sc Project) 

2.      Ekundayo J.O (1990):           Evaluation  of Development  of the

NSE Buries Times, March 5th 1990

3.      NWANKWO G.O (1980):      The financial System Structure and

Growth Longman Group Essex.    

This material content is developed to serve as a GUIDE for students to conduct academic research

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