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This study evaluated the effects of delisting on the performance of the Nigerian Stock Exchange (NSE). The study determined the effect of delisting on market capitalization, All Share Index and Stock Traded. Three research questions were raised and three hypothesis where formulated to guide the study. Samples of delisted firms in Nigeria between 1998 and 2016 were employed for the study it was entirely focused on Nigerian Stock Exchange. The study adopted a longitudinal research design. The study uses secondary source of data collection and the instrument used for the collection of the data was through documentation. The secondary data was collected using a data capture sheet, extracted from the annual reports of the Nigerian Stock Exchange, for the period of 19 years ranging from 1998-2016. The data collected was analyzed using multiple regressions done using SPSS 20 software. All hypotheses were tested at .05 level of significance. Results from the data analyzed revealed that there was no significant effect of delisting on market capitalization, all share index and stock traded. Based on the findings of this study, the following recommendations were made: Listed firms should be supported and given certain financial waivers so as to encourage them to be effective in the market and this would remove the constraints to growth in the Nigerian capital market and especially the stock market; The problems of taxation should be treated in such a way so as not to affect the financial earning and profits of the listed firms in the Nigerian Stock Exchange among others.





The Nigerian stock exchange is a private nonprofit making organization limited by guarantee. It was incorporated via the inspiration and support of businessmen and the federal government through the CBN but owned by about 300 members. The membership includes financial institutions, stock brokers and individual Nigerians of high integrity who have contributed to the development of the stock market and the Nigerian economy.

The exchange is a self regulatory organization (SRO) making and enforcing rules for its members. Today, the NSE has 10 functional trading floor on different parts of the country and companies listed on the exchange cuts across the economic sectors of Nigeria and includes local affiliates and subsidiaries of multinationals(Okafor,2012).It offers a range of tradeable securities to meet the risk profile of diverse investors, provides access to capital for Nigerian and international companies looking to utilize the capital market to fund their expansion strategy(NSE live 2017).The NSE is an highly organized institution dealing in stocks and shares and through the stock shares and debentures.

To get listed on the Nigerian stock exchange, a company must meet with the minimum requirements of the NSE in addition to complying with the exchange’s rules governing listing ,comply with the relevant provisions of the Companies and Allied Matters Act 1990, the investment and securities Act,1999 rules and regulations made thereunder and other relevant statutory requirements (proshare,2015) .stock exchanges have this requirements because their reputation rests on the quality of the companies that trades on them. Not surprisingly, the exchange wants companies that have solid management and good track record.

However, an exchange’s duty to maintain its credibility does not end once a company becomes successfully listed. To stay listed, a company must maintain certain ongoing standards imposed by the exchange. These requirements serve to reassure investors that any company listed on the exchange is a suitably credible firm, regardless of how much time has passed since the firm’s initial listing(cory&janssen,1990) and stocks of listed companies that are unable to maintain the requirements are delisted from the exchange.

Delisting denotes removal of the listing of the securities of a listed company from the stock exchange (financial watch). Delisting differs from suspension or withdrawal of admission to dealing of listed securities, which is for a limited period. Delisting could either be voluntary or involuntary delisting also known as regulatory or compulsory delisting

Corporations are now aiming to reduce costs which do not have any return and payment of listing fees to the stock exchange today is considered by some companies as a burden and for some companies, the benefits of being publicly traded on a stock exchange are not enough to justify the associated costs therefore, the companies can apply for delisting and become privately traded (taxguru,2016), this method is voluntary delisting , while some companies are regulatorily delisted arising from failure to comply with the listing rules and regulations, when the company is brought by a private equity firm and is going to be recognized by its new shareholders, failing to meet financial speculations set out by the stock exchange etc.

The Nigerian stock exchange witnessed 85 delisting between 2002 and 2016 (investopedia,2016) .This delisting were both voluntarily and compulsorily. In 2016, the NSE forcefully delisted 14 companies from the capital market activities on the heels of non compliance with posting listing requirements of the exchange in addition to the delisting of vono products Nigeria plc due to its merger with Vita foam plc making a total of eighty five delistings between 2002 and May 2016(Nigerian news direct,2016). Companies that are delisted are not necessarily bankrupt and may continue trading over the counter if listing requirements are regularized. This research work undertakes a critical review and examination of the effect of these delisting on the performance of the Nigeria stock exchange.


The Nigeria stock Exchange is the market where stock exchange hands between the issuing companies and the prospective investors. The needed funds are to increase capacity utilization , production , consumption of goods and services,  employment opportunities and standard of living in such a given economy .however based on the high expectation , it turns out to become very difficult to raise the needed funds from the stock market through the Nigeria stock exchange to finance the desire project to expand the economic  development . This senerio prevails as a result of the shallowness of the stock exchange capitalization which is one of the indicators often used as a measure of market size (Ime.T.Akpan).

The mission statement of the Nigeria stock exchange ( NSE)emphasizes its role in providing investors and businesses a reliable, efficient and adaptable exchange hub to save and access capital which can be achieved by listing of companies to provide funds and investments, however this role has not been effectively played owing to fewer companies being listed(investopedia,2015).

Delisting of securities from the daily official list of The Nigerian Stock Exchange remains one of the negatives that does not usually go down well with an average investor as it usually results in investment loss, more importantly if it’s regulatory in nature .While delisting can be either regulatory or voluntary, the Nigerian bourse has recorded more of regulatory delisting than voluntary so far in 2015(stock hub). While some firms are able to reconfigure their assets and strategies to adjust to changing technology and tastes, many are not. This inability to reconfigure could be the case for delisted firms. Thus, an involuntary delisting could be due to a fall in the stock price and/or in the productive activity of a firm (kennedy,2002).

The incidence of voluntary delisting is gradually becoming a new normal in the Nigerian capital market and  this act continues to put minority investors at a loss end of the game because once their shares are not publicly traded, the shares become practically worthless(the Nigerian investor 2004). Consequently, delisting has a negative effect on the investors’ wealth insofar as this decision involves a dilution of share prices after the exit from the stock exchange (Baker and Kennedy,2002).

The delisting of 15 companies from the Nigerian Stock Exchange in 2016 took away N24,075,418,729. 61 capital from the market which has a negative effect on the market performance and capitalization of the exchange (investopedia,2016)

With this understandings and viewing from the perspective of the contribution of delisting, this study will analyze the challenges this exercise has posed on the market performance of the stock exchange.


The general objective of this study is to evaluate the effects of delisting on the performance of the Nigerian Stock Exchange. The specific objectives are;

  1. To determine the effect of delisting on market capitalization
  2. To ascertain the effect of delisting on All Share Index

3 .To determine the effect of delisting on Stock traded.


  1. To what extent does delisting affect market capitalization
  2. What is the effect of delisting on the All Share Index?

3 .What is the effect of delisting on the stock traded?


Hypothesis is a tentative answer to a research question, it is often stated in the form of a relationship between the dependent variable and the independent (explanatory) variables. For the purpose of this study, the hypothesis formulated are:

Ho: There is no significant effect of delisting on market capitalization

Ho: Delisting has no significant effect on All Share Index

Ho: Delisting has no significant effect on stock traded.




It is a noted fact that for any meaningful economic transformation of a country to take place, her capital market must be effectively active. It has also been an identified fact that economic strengthen of any nation is measured according to how active or effective her capital market is/or performing its support function (investopedia,2004).

This study will be of significant interest to government and the central bank of Nigeria as they are aware of the problems facing the Nigeria stock exchange and remedies to tackle these problems.

This study will be of interest to investors/shareholders who have been at the receiving end of the delisting. The delisting process usually has a negative influence on the minority shareholders is the final nail in the coffin for a stock, once they are no longer traded publicly, the shares become practically worthless. Many investors have argued that this rule is detrimental to shareholders since it makes it too easy for companies to withhold financial information. They will be able to know the real cause of the problems, response of the NSE and efforts being made to protect their investment.

It is important to emphasize that even if the decision is driven entirely by efforts to maximize shareholders value, the stock market’s reaction to delisting can be negative due to its effect on the market capitalization of the exchange.

This study will also significant to institutional operates of the markets especially the Nigerian Securities and Exchange Commission (SEC) and the future researchers who may want to share their experience and continue with this research.


The scope of this study focus on the contribution of delisting exercise to the growth and market performance of the stock exchange. The delisting activities of the capital market to be captured will be restricted to the period between 1998-2001(pre delisting) and 2002-2016(post delistings).This period of nineteen years will serve as the horizon for the study.


The limitation encountered in this study was the inavailability of local studies on delisting in the Nigerian stock exchange to back up the empirical research but the researcher used international empirical studies and analysis from other stock exchanges to give a detailed insight to the research work


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