Journal of Emerging Trends in Economics and Management Sciences: Home

Article Title:
The Nexus Between Initial Public Offerings and Operating Performance of Deposit Money Banks in Nigeria
by Wilson Ani and Benson Njoku

Abstract:
This paper empirically analyzes the effect of initial public offerings on ownership structure and the nexus between the outcome and operating performance of banks in Nigeria. Using eleven listed banks on the Nigerian Stock Exchange that got quoted on the stock exchange through initial public offer, the study reports results contrary to research outcomes in the popular press. In the first place, the study does not find any significant dilution of the owners? equity stake as the results confirm that the original owners proactively determined the outcome of the IPO process to favour them to continue to maintain superior control rights after the IPO process. Secondly, the relatively enhanced ownership stake of the Directors after the IPO did not result to superior operating performance during the study period. The main significance of the paper is that it shows that ownership structure changes through IPO is not an efficient internal corporate governance mechanism in Nigeria, necessitating reforms in capital market regulations. It is posited that these outcomes are indices of weak soft infrastructure and weak institutions which characterize the structure of the capital market in most emerging economies. The study accordingly contributes to knowledge by filling the gap in the literature on IPO in an important emerging market banking industry

Keywords: Initial Public Offer, Directors' equity ownership, operating performance, stock exchange

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