Corporate Ownership transfer: The role of stock market in Ethiopia

Stock market is one of the types of markets where shares or stocks of different public companies are bought and sold (exchanged). The exchanges of stocks are conducted through formal organized stock exchanges and without a central exchange or broker through over-the-counter marketplaces that operate under a predetermined set of regulations. Since stock represents the corporate ownership & the existence of stock market facilitates ownership transfer. Ethiopia is the largest country in the world with a closed capital account and a functioning capital market. The current underdevelopment of its capital markets starkly opposes the vibrant money and securities market during the 1960s. To achieve the objective of the study, data were collected from both primary sources as well as secondary sources. The researcher has collected primary data through distributing questionnaires to managers and shareholders of companies. The collected data from questionnaires were analyzed using descriptive analysis method. The study employed a convenience sampling technique to select a managers and shareholders of corporations operating in the country. The study evaluated the challenges and existing practice of ownership transfer, and the current condition of stock market in Ethiopia in terms of legal, regulatory, technical, macroeconomic, technological and other factors and found that the legal factors (degree of stability, peace and internal security of a country, inadequate laws and regulation), regulatory factors (lack of good regulation and supervision, deficient corporate governance and public authority, economic factor (high inflation rate) and insufficient technological infrastructure as vital factors that need to be addressed to have an efficient stock exchange market in Ethiopia.