DISPOSITION AND MOMENTUM EFFECT ON EQUITY SHARES IN NIGERIA: THE MENTAL ACCOUNTING AND PROSPECT THEORY APPROACH
Faculty: Management Sciences
Onuora, J. K.
This study examined the relationship between the disposition and momentum effect on equity shares in Nigeria based on the prospect theory and mental accounting. Specifically, this study was designed to assess the extent to which rising stock prices increase the sales and purchases of shares, as well as determining whether accounting information interaction with disposition effect has any relationship with the sale and purchase of stocks. To attain these objectives, research questions and hypotheses were formulated and tested. Related literature to this study were reviewed and the study used Ex post-facto research design. Data were sourced from Nigerian Stock Exchange (NSE) official publications on daily volume of shares traded, Securities and Exchange Commission (SEC), and the Nigerian Bureau of Statistics (NBS). The population of this study comprised all listed companies in Nigerian Stock Exchange as at December 31, 2014 that are current in terms of filing reports through the period(2007 to 2014). The data collected were analysed using panel data regression analysis. It was empirically determined that, positive share price Returns have a negative influence on share prices and there is no significant relationship between momentum effect and share prices in the Nigerian stock market in the period under review. The implication is that momentum is not a general feature of the Nigerian stock market, but is only apparent over certain time periods when considered on sector basis. It is recommended that when there is a progressive increase in the movements in earning per share for a period of time, companies should present their shares for sale, because it will attract the momentum traders to make investments in such companies.
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