The Information Content of Sudden Removal of Corporate Chief Executives–Evidence from the Nigerian Banking Sector

Abstract

This study investigates the information content of sudden removal of banks' chief executive officers (CEOs) in the Nigerian emerging stock market context. Mainly secondly data collected from the Nigerian Stock Exchange daily official list and those extracted from financial standard Newspapers were used. Event study methodology was employed in determining the impact of the unexpected removal of the bank executives on the prices of their banks' stocks. The data was analyzed using regression analysis with the E-views 7.0 econometric package. The findings show that the ouster of the bank CEOs did not significantly impact on the stock prices of Afribank Plc, FinBank Plc, Oceanic Bank Plc, Intercontinental Bank Plc and Union Bank of Nigeria Plc. The non-insignificance but positive information effect of the ouster could be as a result of the prompt intervention by the CBN via the injection of N420 billion intervention fund into the banking sector on one hand, and on the other hand, perhaps because trading on the stocks of the affected banks stopped with the ouster of the CEOs for close to a period of two weeks. The positivity of the average abnormal returns tend to suggest that investors in the Nigerian stock market saw the development as "a good riddance of old rubbish". The study therefore recommends that the CBN should maintain a closer surveillance on the banking sector so as to be able to detect in good time any rot in the system before it blossoms into a "financial epidemic".

Consequences of the Treasury Single Account Policy on the Wealth of Nigerian Commercial Banks’ Shareholders

“…Olowe (2011) found that the announcement of new minimum capital requirements for Nigerian banks by the Central Bank of Nigeria in 2004 had a positive impact on the quoted securities on the Nigerian stock market Osuala, Nto and Akpan (2013). found that the sudden removal of the chief executives of five banks listed on the Nigerian Stock Exchange in 2009 did not significantly impact on the stock prices of the banks involved.…”