Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria

Mohammed Aminu Bello

doi:doi:10.11648/j.ijafrm.20160101.14

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Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria

Mohammed Aminu Bello

Published in International Journal of Accounting, Finance and Risk Management (Volume 1, Issue 1)

Received: 3 August 2016 Accepted: 3 November 2016 Published: 5 December 2016

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Abstract

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 1^st January, 2006 to 31^st 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.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 1, Issue 1)
DOI	10.11648/j.ijafrm.20160101.14
Page(s)	25-32
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Insider Trading, Market Reaction, Equity Issue, Abnormal Return, Nigerian Stock Market

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APA Style

Mohammed Aminu Bello. (2016). Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria. International Journal of Accounting, Finance and Risk Management, 1(1), 25-32. https://doi.org/10.11648/j.ijafrm.20160101.14

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ACS Style

Mohammed Aminu Bello. Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria. Int. J. Account. Finance Risk Manag. 2016, 1(1), 25-32. doi: 10.11648/j.ijafrm.20160101.14

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AMA Style

Mohammed Aminu Bello. Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria. Int J Account Finance Risk Manag. 2016;1(1):25-32. doi: 10.11648/j.ijafrm.20160101.14

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@article{10.11648/j.ijafrm.20160101.14,
  author = {Mohammed Aminu Bello},
  title = {Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {1},
  number = {1},
  pages = {25-32},
  doi = {10.11648/j.ijafrm.20160101.14},
  url = {https://doi.org/10.11648/j.ijafrm.20160101.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20160101.14},
  abstract = {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.},
 year = {2016}
}

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TY  - JOUR
T1  - Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria
AU  - Mohammed Aminu Bello
Y1  - 2016/12/05
PY  - 2016
N1  - https://doi.org/10.11648/j.ijafrm.20160101.14
DO  - 10.11648/j.ijafrm.20160101.14
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 25
EP  - 32
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20160101.14
AB  - 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.
VL  - 1
IS  - 1
ER  -

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Author Information

Mohammed Aminu Bello

Department of Business Administration and Entrepreneurship,Bayero University, Kano, Nigeria

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Mohammed Aminu Bello. (2016). Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria. International Journal of Accounting, Finance and Risk Management, 1(1), 25-32. https://doi.org/10.11648/j.ijafrm.20160101.14

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ACS Style

Mohammed Aminu Bello. Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria. Int. J. Account. Finance Risk Manag. 2016, 1(1), 25-32. doi: 10.11648/j.ijafrm.20160101.14

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AMA Style

Mohammed Aminu Bello. Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria. Int J Account Finance Risk Manag. 2016;1(1):25-32. doi: 10.11648/j.ijafrm.20160101.14

Copy | Download

@article{10.11648/j.ijafrm.20160101.14,
  author = {Mohammed Aminu Bello},
  title = {Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {1},
  number = {1},
  pages = {25-32},
  doi = {10.11648/j.ijafrm.20160101.14},
  url = {https://doi.org/10.11648/j.ijafrm.20160101.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20160101.14},
  abstract = {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.},
 year = {2016}
}

Copy | Download

TY  - JOUR
T1  - Market Reaction and Insider Trading Around the Announcements of Equity Issues: Evidence from Nigeria
AU  - Mohammed Aminu Bello
Y1  - 2016/12/05
PY  - 2016
N1  - https://doi.org/10.11648/j.ijafrm.20160101.14
DO  - 10.11648/j.ijafrm.20160101.14
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 25
EP  - 32
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20160101.14
AB  - 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.
VL  - 1
IS  - 1
ER  -

Copy | Download