Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria
International Journal of Accounting, Finance and Risk Management
Volume 1, Issue 1, November 2016, Pages: 25-32
Received: Aug. 3, 2016; Accepted: Nov. 3, 2016; Published: Dec. 5, 2016
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Mohammed Aminu Bello, Department of Business Administration and Entrepreneurship,Bayero University, Kano, Nigeria
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The need to understand the stock market response to announcements of new issues of corporate securities and the importance of curtailing the fraudulent operation of corporate insiders is paramount. In spite of that, little research attention was given to such reactions in Nigeria. Consequent upon that, this study sought to empirically examine insider trading around seasoned equity offering announcements by companies in Nigeria. Employing the event study methodology abnormal returns were computed as the residuals of the market model. Utilising a total of 62 announcements by 47 companies listed on the Nigerian stock exchange from 1st January, 2006 to 31st December, 2013. Consistent with prior studies the study documented negative significant cumulative abnormal returns prior to the announcement date and a positive significant cumulative abnormal return on the announcement date. The significant cumulative abnormal returns recorded in the period prior to the announcement date could be driven by insider dealings and the presence of an abnormal return suggests the semi-strong form inefficiency of the Nigerian market.
Insider Trading, Market Reaction, Equity Issue, Abnormal Return, Nigerian Stock Market
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Mohammed Aminu Bello, Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria, International Journal of Accounting, Finance and Risk Management. Vol. 1, No. 1, 2016, pp. 25-32. doi: 10.11648/j.ijafrm.20160101.14
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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