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Stock Price Response to Earnings Announcements: Evidence from the Nigerian Stock Market


  • Afego, Pyemo


This paper examines the stock market reaction to annual earnings information releases using data on the Nigerian Stock Exchange. Using the event study method, the speed of reaction of the market to annual earnings information releases for a sample of 16 firms listed on the exchange is tested. Significant abnormal price reactions around earnings announcements suggest the earnings announcements contain value-relevant information. We find that the magnitude of the cumulative abnormal returns is dominated by significant reactions 20 days before the earnings release date which suggests that a portion of the market reaction may be due to private acquisition and, possibly, abuse of information by insiders. The persistent downward drift of the cumulative abnormal returns, 20 days after the announcement, is inconsistent with the efficient markets hypothesis, and therefore suggests that the Nigerian stock market does not efficiently adjust to earnings information for the sample firms within the study period.

Suggested Citation

  • Afego, Pyemo, 2011. "Stock Price Response to Earnings Announcements: Evidence from the Nigerian Stock Market," MPRA Paper 33931, University Library of Munich, Germany, revised 16 May 2011.
  • Handle: RePEc:pra:mprapa:33931

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    Cited by:

    1. Ibrahim Mohammed & Chioma Nwafor, 2014. "Stock Market Consequences of the Suspension of the Central Bank of Nigeria’s Governor," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 12(4 (Winter), pages 371-394.
    2. repec:rss:jnljms:v7i6p2 is not listed on IDEAS
    3. Pius V.C. Okoye & Jane F.N. Okoye & Raymond A. Ezejiofor, 2014. "Impact of the IFRS Adoption on Stock Market Movement in Nigerian Corporate Organization," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(9), pages 202-218, September.

    More about this item


    earnings announcements; abnormal returns; event studies; emerging markets; Nigeria;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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