Weak-Form Efficiency of the Nigerian Capital Market: Prior and Post Internationalization Periods
Journal Title: Gusau International Journal of Management and Social Sciences - Year 2021, Vol 4, Issue 2
Abstract
The Random Walk approach was employed to test the Weak-Form Efficient Market Hypothesis (EMH) in the Nigeria Stock Exchange (NSE); prior and post internationalization periods. Secondary 30-day data was secured from the statistical database of Central Bank of Nigeria and the NSE fact book of various publications covering 1981-2020; giving a sample size of 40 years. The variable utilized market capitalization; which was segregated into prior and post internationalization periods that prompted the longitudinal research design. The Runs test, and Ljung and Box-Pierce test were undertaken to examine if any profitable short-term trading rules and statistical significant patterns exist in security prices, at the 95% confidence level. The estimation indicate the absence of Weak-Form of market efficiency in the operations of the NSE prior and post internationalization periods. Contingent on this finding, the Weak-Form efficiency do not exist in the Nigeria capital market in the reviewed period. As such, investors should frequently employ the use of charts, graphs and patterns in predicting the direction of the market as it helps to earn extra returns on their investment. In addition, the Securities and Exchange Commission should provide periodic investors’ education on the application of charts and patterns in predicting stock price movements.
Authors and Affiliations
Daniel Dornubari Sunday, Omiete Victoria Olulu-Briggs
Keywords
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