THE ROLE OF NIGERIAN STOCK EXCHANGE IN

INDUSTRIAL DEVELOPMENT

BY

CHIKEZIE NWACHI
BAM/H2003/322

DEPARTMENT OF BUSINESS ADMINISTRATION AND
MANAGEMENT (BAM).
SCHOOL OF BUSINESS STUDIES

INSTITUTE OF MANAGEMENT AND TECHNOLOGY
(IMT) ENUGU.

AUGUST 2005

TITLE PAGE

THE ROLE OF NIGERIAN STOCK EXCHANGE IN
INDUSTRIAL DEVELOPMENT

BY
CHIKEZIE NWECHI

BAM/H2003/322

IN PARTIAL FULFILMENT FOR THE REQUIREMENT FOR
THE AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN
BUSINESS ADMINISTRATION AND MANAGEMENT (BAM).
SCHOOL OF BUSINESS STUDIES
INSTITUTE OF MANAGEMENT AND TECHNOLOGY
(IMT) ENUGU.

AUGUST 2005
ii

APPROVAL PAGE

This project work has been approved by the under singed behalf of the
department of business administration and management, school of business
study as a partial fulfillment for the award of a higher national diploma in
business administration and management (HND).

Sign --------------

Sign ---------------

Supervisor

Head of dep. (BAM)

Mrs. Joy Ugwu

Mr, G. Ojemba.

iii

DEDICATION This project is dedicated to God Almighty who gave me this change and made it possible for me to succeed. pursuit and all lovers of knowledge. Also for my mother. has been the source of my inspiration throughout my academic. iv . The almighty through whom infinite mercies. brothers and sister who sacrificed almost every thing for me to be happy many thanks.

My special regard and appreciation goes to my mother Mrs. v . Joy Ugwu for her understanding advice and assistance and my lecturers for their advice on this project work. Helen Chikezie. Above all my hearty praise goes to my creator for sparing my life and seeing me through this programm. Also I acknowledge to my friends and every members of chikezie family.ACKNOWLEDGEMENT I wish to express my sincere gratitude to my project supervisor Mrs. John Chikezie in their own little ways. To him be the glory. The author will never fail grateful mention the help and information provided by the various areas where some of the research work were carried out some of these include the general securities and the Nigerian stock exchange.

The first chapter which fellows the preliminary page starts with the general introduction. security market journal and business times. acknowledgment and table of content. It is proposed to briefly run of short preview of the expected contents of each chapter and preliminary pages of the enter work. The work started with the preliminary page which include the title page approval page. For a general insight and a fair understanding of the intended course of action and various form of presentation evaluation and analysis of data collection from successive interview questionnaires administration as well as other source of data collection like news letters. Also the objective and significance of the study will be revealed along side with hypothetical statement and research question. Therefore a background of the study and statement of problem will be use to achieve this aim. proposal. This means paging attention to the exposure of the topic under research.PROPOSAL This project research study whose subject matter is on the role of Nigerian stock exchange in industrial development is stated to be presented in the normal fine chapter of a project work. dedication. The vi .

vii . Chapter there covers the research design and methodology. Finally. The preservation and analysis of data from the main subject matter of chapter four the data collected therefore are presented analyzed and concluded upon. appendix and questionnaires. Chapter two carries a general review of available relevant literature hence books text book are the expected literature re-reviewed for general searching and support of existing information about the stocks exchanges .chapter finally ends up with the disclosure of the scope and limitation of the study. This will be followed by necessary conclusion and recommendation. Bibliography. The last chapter which is chapter fine will discuss the findings of the research works. development of research material and treatment of data will be given therefore the modes and series of tasks under taken to ensure a successful research and data collection will form the basic discussion under this chapter. Here the general features of the research procedure. Also this project work will end with the information which includes definition of terms. therefore the research have decided to take up this study on the role of Nigerian stock exchange in industrial development just because of her interest on the benefit of the stock exchange and the effects it has on the industry development.

ABSTRACT The Nigerian stock exchange (NSE) has been created to serve various function such as often of business guideline to top business management concerning cost of capital for the Nigerian stock exchange provides avenues for long term investment. In carrying out the research work with the above aim in mind efforts will be made to disclose relevant findings thus drawing necessary solutions and recommendations to alleviate some anticipated problem on the Nigerian stock exchange to be disclosed during the research work. this research work is determined to evaluate the effect of the stock. viii . Exchange on the general business growth especially in recent years. These function credited to the stock exchange is expected to create positive effect on the general business and industrial growth of the country. However.

1 Background of the study 1.0 Introduction 1.5 Hypothesis formulation 1.6 Significance of the study ix .TABLE OF CONTENTS Title page Approval page Dedication Acknowledgment Proposal Abstract Table of content CHAPTER ONE 1.2 Statement of study 1.4 Research question’ 1.3 Objective of study 1.

0 Literature review 2.9 Definition of term 1.5 Functions of the stock exchange in influencing the development parameters CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY 3.7 Scope of the study 1.1.10 Reference CHAPTER TWO 2.2 Historical development of the Nigerian stock 2.1 Evolution of the stock exchange 2.8 Limitation of 1.1 Research design x .0 Introduction to the study 3.3 General relationship of the stock exchange and the economy 2.4 Advantage of the stock exchange as a source fund to the industry 2.

xi .1 Presentation and analysis of data 4.3.10 Reference CHAPTER FOUR DATA PRESENTATION AND ANALYSIS 4.7 Reliability of the instrument 3.2 Area of study 3.8 Method of data collection 3.3 Summary of result.5 Instrument for data collection 3.2 Testing of hypothesis 4.4 Sample size determination 3.3 Population of the study 3.9 Method of data analysis 3.6 Validation of instrument 3.

2 Conclusion 5. xii .4 Suggestion for further study 5.1 Discussion of result findings 5.3 Recommendation 5.5 Bibliography 5.CHAPTER FIVE DISCUSSION RECOMMENDATION AND CONCLUSION 5.6 Appendix.

steps have the establishment of the Nigerian stock exchange (NSE) the evolution of continued existence of the Nigeria stock exchange has always been small lots of shares to e parceled into lumbs large enough to be xiii . It also involve technical activities of a own routine nature concerned with translating research findings or other with translating research findings or other scientific knowledge into products or process.0 INTRODUCTION 1.1 BNACKGROUND OF THE STUDY Industrial growth forms the basis for industrial development is not only needed for its ability to improve living standard. It also acts as a weapon for building national strength and prestige.CHAPTER ONE 1. With the concept of investment as a central factor in the acceleration of industrial growth and development and the prominence given to industrialization. Therefore industrial development implies the increase of industrial. expansion of quality and quality of output and the institutionalization of industrial growth process.

Access to the vast number of capital that are in very small amount of money that in their aggregate have s commend over vast quantities of wealth. By this activity the stock exchange is able to provide an avenue for long term investment to be financed by funds provided by individuals many of whom to make it available for a short term or with draw it at will. Other functions of the stock exchange include the offer of guidance to the business management in relation to the present cost of capital so that the business man can determine his level of investment appropriate to the firm.bought by institutions provide vast numbers of different shares to be trades and providing a broad market in government securities its economic significance depends on its ability to mop up financial capital for investment purpose these include providing liquidity and enhancing these marketability of new issues of stock thus reducing the real costs to business firm by expanding the scope for obtaining fund. It also make it possible for the transfer of funds that imposes only a minimum of administrative efforts he lender. The competitive nature of the stock exchange makes it possible to allocate funds efficiently which is achieved by the market ability to available xiv .

And it in when shares are valued in relation to the expected capitalized value of the firm that effective disciplinary advice which punishes management whose operation are inefficient or unprofitable. xv . equipment and material to increase the physical capital stock of the nation. The stock exchange market plays an important role in propping up financial capital and provision of market for quoted stock so as to chance the fulfillment of these economic growth parameters.companies securities in a manner based on the capitalized value of the company’s expected future earnings. Therefore a reliable rate which results from investment in new factories. Apparently. machinery. only if stock are valued in this way will funds be provided most abundantly and at most reasonable terms to the most promising innovation who accounting to the classical economic theory has the greatest use for them and who is the one that can obtain the profits which will serve as the investors rewards. This investing so as to actualize the economic growth.

For the fact that the number of quoted security is small and the total capitalization is about 335 billion which is nothing when compared with some companies abroad that have more than that amount of money as its capital is not encouraging. The worst of it all is the political climate. The stock market is faced with the problem of valley in delivering and settlement of stock transaction. And for the fact that the government is get to privatize most of the companies in making the stock market not to have financial strength. Also affecting the market is the fact that most of the operators ie the issuing.1. the stock brokers auditors etc. which will not allow foreigners to invest in our securities because of unforeseen circumstances. xvi .2 STATEMENT OF PROBLEM The ignorance of the stock exchange has brought about how participation of firm and individual engaging in the stock exchange and this has also limited the availability of stocks and shares that could be traded on the stock market. are not connected on line and as a result of this information does not come handy.

One of the objectives is to examine the extent to which the Nigerian stock exchange has helped in the growth and development of the industrial sector. This research work could also be guide to subsequent research work similar to this. Why are stock market facing the problem of delay in delivering and settlement of stock transaction? 2. the recommendations from this write up can also help to as large extent to improve stock exchange and it show the important of the stock market.4 RESEARCH QUESTION 1.1. What cause low participation in firm and individual engaging in the stock exchange? xvii . 3. 1. The stock exchange has contributed positively to the industrial development of the economy in providing market for quoted securities.3 OBJECTIVE OF THE STUDY 1. 2. The role of stock exchange to industrial development encourage firms and individuals to invest in the stock exchange venture. 4.

How can our political climate not allow foreigners to invest in our country? 4. 1. Why do government delay to privatize most of the companies in order to have financial strength in the stock market? 1.3.5 HYPOTHESIS FORMULATION To facilitate the expansion of the claims on the stock exchange role in industrial development these hypothesis have been formulated to know if the Nigeria stock exchange has made positive contribution to the industrial growth and development in Nigeria. H0: There is no positive relationship between operational efficiency and pricing of securities. H0: There is no positive relationship between operational efficiency and pricing of securities. xviii . H0: Quoted firm do not perform significantly better then they did prior to such quotation H0: Quoted firm do not perform significantly better then they did prior to such quotation 2.

H0: Increase in quotation does not lead to increase in the investible fund.6 SIGNIFICANCE OF THE STUDY The role of stock exchange and a catalyst in the development of the economy has not been a question of debtor. H0: Increase in quotation does not lead to increase in the investible fund. xix . The stock exchange exist as a sources of fund to the industrial development and also for the channeling of personal savings stock into industrial place for trading company’s stock. It also creates room for capital widening stock rather than deeping it. The benefit of stock exchange quotation is the result of lower cost of capital when raising fund through the market as stock exchange helps to allocate funds between industries and also makes funds available to the most productive industries which hence develop the nation.3. 1.

Another problem is the time allocation in this research work which is not enough to make a thorough investigation which the topic deservers. Although some members of the exchange assisted with some data information and oral explanation but not without restriction and limitations. Problem into salient areas were not allowed rather an exclusive reservation of the market and all information relating to such area were preserved for the market use only.1.8 LIMITATION These proposition are not easily established with out some constraints here and there. 1. xx .7 SCOPE OF THE STUDY The scope of this study covers only the role the stock exchange as a marketing floor for quoted share and stock thereby providing liquidity for the shares and stock helps in the moping of units of inevitable funds which on the aggregate dorm large enough capital. The financial restrictions cannot be left out which also made it impossible to visit the exchange regularly. Some of the problems associated with the study is the lack of data and stick confidence exclusive to the market.

STOCK: The ability to mop-up financial capital for investment purpose.1. xxi .9 DEFINITION OF TERM INDUSTRIAL DEVELOPMENT: The increase of industrial expansion of quantity and quality of output in industrial growth process.

George C. Fanning D. 4.V Morgan: The Stock Exchange its History and Functions Elect Book. xxii . Professor E. 3. (1973) Marketing Company Shares Grower House Hants. 2. (1974) Introduction to Investments New York: MC Grow Book Company.T (1980) Industrial Finance Methuen London. Cottrell P.REFERENCE 1.

E) is. During the war between France and England.CHAPTER TWO 2. there was much devastation of the British economy that it couldn’t finance Merchant trade. As a result of this and the intention to spread the risk arising from the attack of British ships by pirates.0 LITERATURE REVIEW Different opinions have been expressed about what stock exchange (S. But the encyclopedia of banking xxiii . The stock exchange does exist for the purpose of channeling personal savings into industrial place for trading company shares. and the remedy was the creation of a formal market. The market on which money is provided. Since there was the potentials polices of capital widening rather than capital deepening. there was need to mobilize capital to finance trade since direct financing was not enough to sustain the trade levels . Kenneth Midgley said that the stock is the prime institution in the stock market and it is a specialist market place. it has form time been referred to as the source of capital for business expansion. It also provides the mechanism for the exchange of shares which already exist.

From the various opinions and views as stock exchange.and finance expressed the view that the exchange themselves do not trade in the listed securities they merely provide the facilities for trade. the firm has to become a member before benefit can accrue to her. Other opinions such as Christy et al look at stock exchange as an associate of broker formed to provide improved facilities for the execution of customers order and the Nigeria stock exchange in her pamphlet question and answer” meant for distribution to the public for enlighten purpose define the market as “A stock exchange is a market where large and small investors alike buy and sell through stock brokers the stock (or shares) of companies and government agencies the stock exchange provides the essential facilities for business expansion and development projects through investors who share in cooperation for the ultimate economic benefit of all Nigerians. through the stock market does not participate the actual fund creation but offer facilities for raising fund (capital formation) and this is crucial to the economic growth of any economy. To participate in the activities of the stock exchange. they have portrayed the market as a medium of raising capital. xxiv .

Stock exchange like any other economic activity grew out of the these factors. it could be properly referred to as a provider of fund for expansion for listed companies and a market creating forum for the sale of the shares of existing quoted firms. It has the ability to bringing together potential sellers and buyers.1 EVOLUTION OF THE STOCK EXCHANGE Event keep reminding us of the strong dependence of any economic policy on the flow of capital. Historically. the development of any economic activity depends on the situation prevailing at that time and the corresponding development of any economic activity will meet the demands of the time.Perhaps its exclusion policy the prestige it enjoys in all the stock market may be defined as a market creating form for registered companies who to raise additional fund for expansion modernization. 2. The stock market developed during the year of commercial and intellectual dermal between the restoration and death of Anne. xxv . Realistically. Therefore the prior conception of the stock exchange. as a provider of fund for the formation of new enterprises is an illusion. Purpose by using the facilities provided in the stock market.

this early voyages of the east India company market the beginning of a transition to xxvi . the ownership of which in fairly widely distributed. The first set of stock exchange developed by 218 merchant who wanted to open up trade with the India and East Indies pulled their resources together and signed into charter on December 31st 1600 after a prolonged negotiation. The formation of the stock depend strongly on the availability of securities and supply by the formation of font stock companies and during the beginning of the permanent natural department.Before this there must obviously be as considerable volume of securities. This was possible because of the fusion of the partnership and cooperation in the middle of the 16th century and this was provided the basis feature of the modern joint stock company’s. England fulfilled all these primary condition at the end of the 17 th century. there must be a sufficient number of wealthy men and women who wish to hold some of them possession in financial assets rather than in business or real properly. the development of the market will also be procedures for the transfer of titles and fairly small denomination and if there is a banking system to provide a simple means of payment.

Africa and fishery company’s. As a result of the prevailing situation then was wide spread holding of government short-term depts. Another landmark in company history accrued in 1962. And was normally with people whose market was obviously wanted. It was thin period that produced the first real boom in company floatation and which brought. which was fed by a rising supply of coins and notes.more modern practice. and the uncertainty of payment gave by opportunities to speculation. the share were generally of fixed though still large amount of subscription list were kept open until the total sum required had been raised. Prices rose sharply between 1990 and 1995 and there was great commercial activity and speculation. xxvii . and there was a wide spread inflation. when an act of parliament gave limited liability to share holders in the East India. The prolonged war of England and France brought the government into borrowing in large scale hitherto unprecedented. The profession of stock broking for the first time into limelight.

During this periods. During the late 50’ s when it was becoming eminent that there was to be independents state and growth of commercial activities. As a xxviii . the dealing in stock and share were haphazard and unorganized before 1860 but in the mid-nineties there was highly developed market. 2.It can be safety said that the foundation of modern stock market started from the tally broken” who death with government short-term dept to that turned their attention to longer term dept and to company stocks and shares in the seventeenth century. This takes us to the peculiar nature of the development of stock exchanges in Nigeria.2 HISTORICAL DEVELOPMENT OF THE NIGERIA STOCK EXCHANGE. The whole process of stock exchange evolution was as a result of economic situation existing at that time accompanied by government in public department. The Nigerian stock exchange evolve purely out of the act of parliament and speculation of future business expansion. some Nigerians in collaboration with their foreign partners (British) wanted a local source of fund for enterprise promotion.

1. 3. The creation of facilities in dealing in the shares. Consequently in 1853 the government set up a committee under bar back to advice on way and means of fostering a share market in Nigeria. The economic situation at that time brought many consequences and there was a retardation of business activities and basically the government initiatives were based on. 2. 2. The need to finance growing budget deficit as from 1958 by the issue of money capital market instrument. xxix .result of the desire for the establishment of an institution in the country to be used as an avenue for funds mobilization and development of local capital formulation. 1. The need to mobilize finance to embark upon development programme. The establishment of rules regulations transfer and 3. The report of the bar back committee was in 1959 and it recommended among other things. The deteriorating balance of payment position as from the government desire to facilitate the repatriation of funds invested abroad. The federal government had interest and took the initiative to establish a formal market for trading in stock and shares. Measures to encourage savings and issue of securities of government and other organization.

xxx . directly opposite the central bank. it could also mean the reflection of federal character.As a follow up of bar back committee the Lagos state exchange now Nigerian stock exchange was established on the 1861 under the Lagos stock exchange act 1961 no 1 the act states that. An act to prohibit the carrying of the business of stock broking in relations to stocks bearers and other securities granted in 1979. Today the Nigerian stock exchange occupies her permanent building at 2/4 customer street Lagos. As the economy grew it is accompanied by an expansion of business activities and the need to spread out into other parts of the country so as to after an opportunity for equal participation. there was another movement in Lagos for the provision of the necessary facilities to handle the work forested on it by the country’s economic circumstance. the stock exchange opened trading floors in Port-Harcourt and Kaduna in 1977 further more. The additional two floors in Port-Harcourt and Kaduna brings to three the number of trading floors while the national consist of the exchange retains the overall responsibility for quotation and the enforcement of regulations in the capital market.

2. always fluctuating according to the events in the economy and the absence of the stock exchange restricts the amount of investment that take place in a country and makes investment more difficult.3 GENERAL RELATIONSHIP OF THE STOCK EXCHANGE AND THE ECONOMY. It’s operational guidelines are as stated at the formation period of the Lagos state exchange with minor amendments made to suit the changing needs of the time.Further development led to the setting up of Nigerian financial system review committee in 1976. there was the transformation of the Lagos stock exchange into the Nigerian stock exchange. The stock exchange follows the rhythm of the economy. On he recommendation of the Nigerian financial system review committee in 1976. It is the investment capacity of any nation that determine the rate of her economic growth and the level of the people’s welfare. xxxi . It is that role of the stock exchange in mopping up money capital for investment purpose that forms its relationship with the economy.

Every economy aims art improving the welfare situation of her inhabitants by providing quantitative and qualitative consumer product in sufficient amount and this can only be achieved via investment process. This statement was further buttressed by Christy who said that bulk of American securities (about one half) of the new savings of the country for investment being raised in the capital market.” This relationship between the stock exchange and the economy makes the economy and the stock exchange to often more in the same direction particularly on the monetary policy influence via it’s impact on the stock market if the expansion xxxii .N. Stock exchange Investment G.Baumol has this to say that the market for stock and bond perform many essential and useful function in the limited state economy.P) and by making more goods available to the people for more consumption and improvement of their welfare.P Economy Market Increases Grows The mopped up capital is invested in the production sector of the economy to stipulate production and increase the output levels thereby improving the gross national product (G. In a well developed economy the bulk of her inventible fund passé through the stock exchange and this could be explained by the diagram below.N.

The stability of any economy and confidence in the ruling class depends on its ability to improve the welfare situation of the inhabitants and one way of doing this is by an increase in consumable items which always come as a result of investment. Having being able to always run ahead of anticipated events and the events when they happen. in the strict sense there is close relationship between the stock exchange and the economy.of the money supply reduce yields the discount factors to the future return from stocks will work to increase stock values. 2.4 ADVANTAGES OF THE STOCK EXCHANGE xxxiii . being so discounted have less effect if any effect at all. As the economy improve so also is the stock exchange trade performance improve this pari-passu movement of stock exchange and the economy confirms the claim that stock exchange pay close attention to the economy’s health. For this reason a health stock market is an important ingredient in the capital formation and economic growth process. Therefore.

It is the public given to the stock exchange that widens interest in the stock. Further advantage is its quality of liquidity which makes companies shares and debentures more attractive to investor’s who would like to associate xxxiv . This prestige offer quoted firms the advantages of better prices for their shares fairly determined financing is facilitated and added value is imparted by listing.As a sources of fund to the industry. “ scarcity and dearness of capital are a common place complaint whenever men of business are gathered together”. It is where a company has succeeded in joining the big companies on the stock exchange that it will be assumed as having derived and when admitted it offers the company easier means of raising money than was the previous case. Raising money on the stock exchange usually implies that there is a public limited liability company that required new capital and make an offer of this capital generally to the public and simultaneously an application is made to the stock exchange for permission to deal in the share. the prestige of the market enhance it’s collateral value and supervision of exchange and regulatory agencies usually brings good corporate and trading practices.

expansion of the industry Nigeria stock exchange is central in the investible fund mobilization act. it is this desire that the government created and maintained an ordinary market for the issue of trading in securities.5 FUNCTION OF THE STOCK EXCHANGE. Cost of capital 3. thereby facilitating the providing of xxxv . 1. Efficient allocation of funds between industries 4. 2. GROWTH INDUSTRY: Firms need funds to expand.themselves with companies quoted on the stock exchange and to provide the need capital for expansion. Growth in industry 2. Having said this we shall examine how the stock exchange has influenced the development of these parameters. 1. namely. The stock market and problem in indigenous enterprise. In influencing the development parameters the propelling factor of any development parameter in her productive sector so as to enhance a growth. Availability of funds 5.

COST OF CAPITAL: The benefit from the stock exchange quotation is the result of lower cost of finance when raising fund through the market as against the utilization of alternative source and the relation case of rising found through the market. A high stock price will exchange for relatively generously quantities of resources. The stock exchange form an avenue from which the saving of the problem can be mobilized and channeled into financial development in both the public and private sector of the economy. its benefits as regards the financing of industrial development to ensure expansion and growth reflected the common optimistic conviction that the presence of special primary and secondary market in securities would solve the problem of growing needs for industrial finance and thereby promote economic development. and this is generously referred to as lower cost of capital. But in reality the cost of living makes it higher in raising fund through the stock market and where there are no artificial constraints or the existence of any rigid and xxxvi .industrial finance. 2.

5. 3. 4. Thus if the stock market is to serve as an efficient allocation of capital in the economy at large. EFFICIENT ALLOCATION: Of funds if the stock market is to save as a efficient allocation of fund. the bank and other financial institution can provide the needed fund without much difficulties. AVAILABILITY OF FUNDS: By the manner of valuation whereby the share of progressive companies are increased and non-profitable are penalized. The stock market and problem in indigenous enterprises with the number of listed securities in the Nigeria stock market slow that the stock market xxxvii . it must device a means whereby it values the shares of a company on the bases of its expected capitalization earning when stock market closely correspond to perfect competition ideas the more efficient is the market as allocation of resources. it has succeed in allocating funds to the most productive sector of economy thereby enhancing the rate of growth of the nation. it must some how expect influence in the capital market over which it has no approach I direct control.baseless financial tradition.

and adopt other advertisement media to activate and stimulate public awareness about activities on the capital market and the benefit accuning to public quotation of companies. the apparent reluctance of Nigerian promoted companies to avail themselves of the services of the Nigerian stock exchange can be attributed at least in part to the failure of the exchange to persuade them to do so. Therefore.is still to witness the listing of a company wholly promoted by Nigerian entrepreneurs go this reluctant attitude of Nigeria enterprises to go public and get listed has been a ca se of concern on the management of the Nigerian stock exchange. If the market is to grow. xxxviii . Nigeria stock exchange has to conduct seminars. strenuous must be made to persuade and encourage indigenous business to make public issues and raise fund from the Nigerian capital market for this reason.

REFERENCES

Kenneth M. (1977) Market and Its Nature and Significance Macmillan Press
limited.
Kuotsyiannis A. (1982) Non-Price Decision the Firm in Modern Context. The
Macmillan Press limited.
Madadilan D.I.L (1977) Guide to Share Investment Long man London.
Mc Rac H. (1974) Capital City London As A Financial center France Caun
cross Eyre Methuen London.
Peter R. (1976) Capital formation Success Investment.

xxxix

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY
3.0

INTRODUCTION TO THE STUDY

Industrial development implies the increase of industrial expansion of quality
and quality of output, it also involved technical activities of a non routine
nature concerned with

translating research findings or other scientific

knowledge into products or process.

3.1

RESEARCH DESIGN.

This chapter is basically concerned with the design sources of data collection,
population of the study, sample size determination.
These are discussed below.

3.2

AREA OF STUDY

The areas of study was the Nigeria stock exchange market. Generally securities
exchange market and business time.

xl

3.3

POPULATION OF THE STUDY

The population of this research study is summed up to a total 470 include the
senior and junior staff as a result of the members of staff. It was not possible
reach the entire population, therefore the population was reduce to a reachable
size.

3.4

SAMPLE SIZE DETERMINATION

The population was reduce to a reachable size using the Yero-Yameni Formula
and statistical1
N=

where

N
1 + N (e)2
n = sample size
N = Population size
e = margin of error (5%)
I = constant.

n=

N
1 + N (e)2

xli

0025) = 470N 1 +1.175 n = 216 QUESTIONNAIRES DISTRIBUTION AND RETRIEVAL 216 questionnaire were distributed and 213 were returned properly filled while 3 question were not properly filled and was rejected. xlii .175 = 470N 2. Also directed observation on was employed sourcing information questionnaire was constructed in such a way that staff of Nigeria stock exchange would understand easily.5 INSTRUMENT FOR DATA COLLECTION The research made use of questionnaire for data collection.05)2 = 470N 1 +470 (0. 3.= 470N 1 +470 (0.

the questionnaire was then sent back to project supervisor for the final correction having satisfied with the corrected. Also data was collected from post research work journals. some errors was detected and the questionnaire was sent back to the researcher for correction. The questionnaire was proved to be valid and approval for the final was given.7 VALIDATION After the preparation of the questionnaire it was sent to student project supervisor for validation. 3. Through primary and secondary source.6 METHOD OF DATA COLLECTION The research should sourced her date. 3. After series of secretary. Having made the necessary correction.3. The primary data was collected through the distribution of questionnaire and direct observation.8 RELIABILITY The reliability of the questionnaire be lest retest method that is last with a controlled group after two weeks of initial distribution and retrieval of the xliii . These form part of secondary sources. Magazine annual publication.

xliv .question. The instrument was administered again to the same group and they consistency and reliability.9 METHOD OF DATA ANALYSIS The use of complex statically and mathematical method of data analysis was not involved expect the use of sample statically method ie trend and regression techniques which were used to text some of the hypothesis. 3.

Grow Hill Book Company. Mac Million Press Limited. The Stock Market and Economic Efficiency.W (1968) British Economy of the Nineteenth Century Oxford University Press Ely House London. Ngena Stock Exchange Genesis Organization and Operation xlv . Professor E Morgan The Stock Exchange its History and Function. George C (1974) Introduction to Investment New York mc.REFERENCE Kenneth M. William Baumol. B Aveago. R. Thomas Uyold B J R Money Banking and Economic Activity 3rd Edition. (1977) Business Finance and Capital Market. Rostow W.

3% this means the problem of stock is properly confronted. Question 1 Why are stock market exchange facing the problem of delay in delivering and settlement of stock transaction? Variables No of respondents Percentage of respondent Yes 116 53.7% while 100 respondent said No to above question with corresponding 46. This will be accomplished by the use of tables and percentages. Question 2 What cause low participation in firm and individual engaging in the stock exchanged? Variables No of respondents Percentage of respondent xlvi .CHAPTER FOUR 4.7% No 100 46.3% Total 216 100 From the table 116 respondents said ye to the above question with corresponding 53.1 DATA PRESENTATION This chapter will be used to present and analysis various data gathered during the course of this work.

Question 3 How can our political climate not allow foreigners to invest in our country? Variables No of respondents Yes 116 No 100 Total 216 In the table respondent said Yes to the above Percentage of respondent 53.1% that said No.7% 46. Question 4 Why do government delay to privates most of the companies in order to have financial strength in the stock market? Variables Yes No Total No of respondents 200 16 216 Percentage of respondent 92.4% 100 xlvii .3% 100 question with corresponding 53.Yes No Total 110 106 216 50.3%.9% of respondents that said Yes which 106 representing 49.5% 07.7% while 180 said No to above question with corresponding 46.9% 49.1% 100 In the table below 100 representing 50.

xlviii . Question 5 Does Nigeria stock exchange face the problem of environment? Variables Yes No Total No of respondents 206 10 216 Percentage of respondent 95.4% of responds that said No that.4% that said Yes while to representing 04.6% of respondent that said No this means the problem of stock is properly confronted. Question 6 What units of your organization is responsible for environmental factors? Variables Yes No Total No of respondents 106 10 216 Percentage of respondent 49.5% said yes while 16 representing 07. It also shows that the problem of stock exchange is properly confronted.From the above 200 representing 92.6% 100 In the table 206 representing 95.9%.9% 100 Here 106 respondents said Yes to the above question with 49.1% while 110 said 10 to the above question with corresponding 50.4% 04.1% 50.

Question 8 How will you rant the impact of complicity and dynamism of business environment on you company performance? Variables Yes No Total No of respondents 100 116 216 Percentage of respondent 53.9% of respondents that said No.1% that said Yes while 100 representing 50.Question 7 What are the factors militating against the contract of business environment factor in your firm? Variables No of respondents Percentage of respondent Yes 106 49.7% 46.1% No 100 50.9% Total 216 100 From the table 106 representing 49.3% 100 xlix .

it means that the organization is still facing the problem of dynamism and environment performing in their company.7% while 116 said No to above question with responding 46.From the table below 100 respondents said Yes to the above questions with responding of 53. l .3%.

CHAPTER FIVE DISCUSSION. 2. li . Through it managed to maintain a growth rate of 6.1 DISCUSSION OF RESULT FINDING. it was observed that the firms. RECOMMENDATION AND CONCLUSION 5. Perform significantly better when quoted.7% with as dividends declared. Subsequently the profit have improved and by 1983 the authorized shares of the company rose to b25 Million and the paid up capital was N13. 1.10% per annum. But our second sample firm (unquoted) is characterized by low level capital base with one time profit and series of losses within the tested period. From our tested hypothesis in chapter four and going by the history of sample firms. Merchantile Bank of Nigeria Ltd (sample firm) started on a good note but was operating on a marginal profit level until 1978 when quotation offered for sale her shares thereby expanding the capital base and offered the bank more fund to operate with.4 million. Quoted firms have a faster rate of growth than unquoted firms. The growth rate for the 3 tested operational years is put at 14.

The increase in quotation lead to the growth in investible fund. As facilities expend does it lead to growth in investible fund.2 CONCLUSION The whole exercise has been tedious particularly to a person working with limited data and distance of research center.Comparing the two sample firms. Both tests proved a positive result which all point at growth in investible fund when facilities and improved or quotation increased. going through the work. 1. 2. Efforts were made to clench some thing from the individual limited sources. Perhaps these indications of public awareness of the stock exchange operations and the expression of their willingness to hold their money in security raised via the stock exchange. Additional test were carried out to ascertain if. it will be realized that Nigeria stock exchange has played its role as a source of lii . Therefore stock exchange help in raising up scattered funds and stimulate individual interests in investment. 5. it was established that greater advantage abound in quotations on the Nigerian stock exchange particularly with the expansion of the capital base and improvement in profit making propensity. However.

2. On the Nigeria stock exchange. Our tested hypothesis have proved this.3 RECOMMENDATION In my opinion and with the present economic crunch in view. efforts should be made on listing some of the Nigerian firms on foreign stock exchange.fund for industrial development and expansion. transaction should we allowed to operate party on market forces. it is when we are able to do this that we can place the economy on a viable development path. Self identification in the form pride of ownership or organization of business along the family line may not provide the needed capital and the manpower requirement for effective and efficient operation of their firm. But the fear of domination by foreign investors might till the idea but the quoted firm should not be carried whole some to overseas. colour to pool their resources together to have an enlarged enterprises capable of enlistment. liii . The percentage of foreign participation should be clearly specified. This will help to bring in more foreign currency into the economy. race. Therefore I can on all business men irrespective of tribe religion. 5.

Adequate publicity should be given to Nigerian stock exchange and the public educated on the activities of the stock exchange to induce more participation.4 SUGGESTIONS FOR FURTHER STUDY Studies can be carried out using different types of foreign investors method of bring in more foreign currency into the economy it is when we are able to do this that we can place the economy on a viable development path. 5. 4. Government should reduce influence on the Nigerian stock exchange. liv . 5. Facilities should be improve more trading floors should established to raise up additional capital for investment purpose commercial centers such as Aba and Kano should have quick access to the stock exchange dealings.3.

A Rostow W. (1977) Development Economics: Mc Grew Hill Book Company New York.Y U. Bickster J.C Health and Company London.S.T (1980) industrial Finance 1830-1914 Methuen London. Cottrel P. Salvatore D.J (1965) The Stock Market and Economic: Efficiency for Diham University Press New York.W (1968) British Economy of the Nineteenth Century Oxford University Press Ely House London.L (1979) Capital Market Equilibrium and Efficiency Implication for Accounting Financial and Port Folio Decision Toronto. Grew Hill Book Company New York. George C. (1974) Introduction to Investment Mc.BIBLIOGRAPHY Baumol W.R (1974) Thomson’s Dictionary of Banking Pitman Publishing N. lv . Solink Brunoh (1973) European Capital Market Lexington Book D . Ryder F.

K. Todaw M. lvi .P (1982) Economic for a Developing World 2nd Ed Long Man Group Limited U.Thompson A (1975) The Dynamics of the Industrial Revolution Edward Armold London.

lvii . you kindly complete this questionnaire as objected as possible so feel free to express your opinion.APPENDIX QUESTIONNAIRE Institution of management and technology IMT Enugu Enugu State Dear Sir/Madam I am a student of Institution of management and technology. A an employer/member of top management board of this organization your participation is important for the success of this research work. This questionnaires is for a research work being conducted on strategy for managing environmental factors in Nigeria business organization with particular reference to manufacturing firms in Aba. in the department of business administration and management. I request.

5 Yes ( ) No ( ) Does business environment affect you business. Specify the number of people who can establish a business? Yes ( ) No ( ) Determine place for location of business Yes ( ) No ( ) Registration of a business name as a necessary prerequisite for starting business operation ? 4. 3.QUESTIONNAIRE Please kindly tick () in the option that appropriately represent your response. Yes ( ) No ( ) Do you ensure provision of soft loan to business through development bank ? lviii . do not tick more than one in one question 1. 2.

10. 8.7. Yes ( ) No ( ) Limit ability to raise adequate capital? Yes ( ) No ( ) Demand high collateral security for procurement of loan? Yes ( ) No ( ) How is the price control of commodities? Yes ( ) No ( ) Ensure exemption of excise duties on exportation? Yes ( ) No ( ) Are there strategies adopted by your company for managing environmental uncertainty? Yes ( ) No ( ) lix . 9. 11.

Yes ( ) No ( ) How will you rank the impact of complexity and dynamism of business environment on your company performances? 14. Yes ( ) No ( ) What are the factors militating against the contract of business environment factor in your firm? 15.12. Does complicity and rapidity of change of environment center any problem for your firm? 13. 16. Yes ( ) No ( ) Does your firm embark on environmental scanning? Yes ( ) No ( ) Does business uncertainty lead to strategies planning? Yes ( ) No ( ) lx .

17. Are goals/objective of the organization affected by the level of environmental uncertainty management? Yes ( ) No ( ) lxi .