The Role of the Nigerian Stock Exchange in the Valuation of the Equities of Privatized and Commercialized Public Enterprises 1988-2003

Abstract

This paper examines the role of the Nigerian Stock Exchange in the privatization and commercialization of public enterprises. The hypotheses of this study were formulated around the issues of compliance of valuation and pricing of shares of the privatized enterprises with rules and regulations; fairness of share allotment bases; the production of relevant and adequate information about the affected enterprises. Appropriate data for the study were generated through questionnaires, interviews, and direct observations of stock exchange dealings. Secondary data were obtained from texts, journals and other unpublished works. The data obtained were analysed and the hypotheses were tested using the Chi-square method of statistical analysis. Other data were tested using the Linear Regression Method. It was found that the Nigerian Stock exchange, among other things ensures the compliance and valuation of shares with rules and regulations; fairness of share allotment bases; the production of relevant and adequate information about the affected enterprises. Commercialized enterprises might not benefit directly from the market if they would not go public. While the Stock exchange contributes significantly to the success of the programme, privatization and commercialization have impacted seriously on the absorptive capacity of the market.It was recommended, among other things, that the Nigerian government should review existing economic polices in order to stimulate savings and its mobilization through the stock exchange and avoid unnecessary interference in the privatization programmes; that stock exchange operators should have increased roles in the privatization and commercialization process; the publicity for shares to be sold should be extended to the rural areas; and that the timing of share issues should be carefully planned in order to avoid under-subscription and over-stretching the absorptive capacity of the Nigerian Stock exchange.

Keywords: Stock Exchange, Public Enterprises, Privatization, Commercialiazation, Equities

JEL Classification: A12, E2, G1, G18, H3, H4