Capital Market Performance and Privatization

Filed in Economics Project Topic by on October 18, 2020

Capital Market Performance and Privatization.

ABSTRACT

This work investigates capital market performance and privatization in Nigeria from 1975-2015 using secondary data obtained from Central Bank of Nigeria and Ordinary Least Square estimation technique.

The empirical finding of the study revealed that privatization did not have statistically significant effect on capital market operations in Nigeria.

The study therefore advised the government to take a second look at its privatization policy programmes so as to ensure it achieves its aims and objectives especially with rewards to the capital market.

INTRODUCTION

The capital market plays a very important role in the privatization exercise to the extent that, without the mechanism of the market the privatization exercise may not be possible (Osaze, 2001).

It is in view of this that the Decree No. 25 on privatization and commercialization categorically stated in section 6 (1) “all shares of enterprises to be privatized under this decree shall be offered for sale in the Nigerian capital market.”

In subsection 2 of the decree, it also stated that “all offers for sale of shares under sub-section 1 of this section shall be by public issues except where the Federal Government, on the advice of the Technical Committee on Privatization and Commercialization, decided that the shares of any affected enterprises should be sold by private placement.”

And section 4 of the decree states that “the Technical Committee should advice on the capital restructuring needs of enterprises to be privatized or commercialized under this decree in order to ensure good reception in the stock exchange market for those to be privatized as well as to facilitate good management and independent access to the capital market.

In section 4 (b), it also states that to carry out all activities required for the successful public issues of shares of the enterprises to be privatized including the appointment of issuing houses, stockbrokers, solicitors, accountants and other experts to the issues, and to approach, through the appointed issuing houses, the Securities and Exchange Commission for a fair price for each issue.”

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