Nigerian Journal Sustainability Research

Publications

Vol. 4 No. 1 (2026): Building Resilience: Perspectives on Sustainability

Examining the Role of Asymmetric Information and Transaction Costs in Shaping the Nigerian Stock Market Performance

Submitted
January 30, 2026
Published
2026-02-08

Abstract

This study investigates the impact of asymmetric information and transaction costs on the performance of the Nigerian stock market, focusing on market capitalization as the dependent variable. The aim is to understand how financial market frictions influence market efficiency and investor behavior from 1992 to 2025. The study adopted a quantitative approach, utilizing time-series data sourced from the Central Bank of Nigeria (CBN), the Nigerian Stock Exchange Fact Book, and World Development Indicators (WDI). The theoretical framework guiding the research is based on Public Choice Theory, Resource Dependency Theory, and Management and Role Theory, which highlight the influence of information asymmetry, transaction costs, and regulatory roles on market performance. The findings reveal that transaction costs significantly and negatively affect market capitalization, suggesting that higher transaction costs hinder market efficiency. However, asymmetric information did not show a statistically significant direct impact on market performance. Financial costs were also found to have a positive but insignificant effect on market performance. The study concludes that financial market frictions, especially transaction costs, play a critical role in shaping the Nigerian stock market, emphasizing the need for policy reforms to reduce these costs. Therefore, the study recommends improving market transparency, reducing transaction costs, and strengthening regulatory oversight to enhance the efficiency and growth of the Nigerian stock market.

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