Measuring Transparency and Quality of Information Analysis in an Emerging Stock Market

What is it about?

This study provided an answer to the question: what is the nature of the weak-form efficiency of the Nigerian Stock Exchange and its sectors after the global financial crisis (GFC)? Weak-form efficiency is a hypothesis that is used to evaluate the extent of transparency in pricing of financial assets and quality of information analysis by financial market participants. In weak-from efficient stock markets, stock prices are not predictable. In analysing the nature of weak-form efficiency, the study departs from the normal way of evaluating the stock market as a whole by measuring the sectors of the market, and an index that represents the most active stocks in the market. The study find the following: (i) Nigeria stock market returns has become positive after the crash during the global financial crisis. (ii) stock pricing in frequently traded sector are more transparent resulting from better quality of information analysis.

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Why is it important?

This study is important because it highlights the sectors that require improvement in the price discovery process. It is also important because shows the quality of information analysis by sectors therefore helpful to investors for making optimal investment decision and portfolio management. It is also important stock regulators as they will channel policy efforts to enhance the process of price discovery and price transparency in inefficient sectors. Future scholars of similar topic will equally benefit from the study.

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