INVESTORS’ SENTIMENT IN THE NIGERIAN STOCK MARKET: DOES COVID-19 MATTER?

Authors

  • Gbenga Festus Babarinde Modibbo Adama University
  • Olusegun Adegoke Adewusi Modibbo Adama University
  • Tajudeen Idera Abdulmajeed Nasarawa State University Keffi
  • Yusuf Hassan Haziel Adamawa State Polytechnic

Abstract

Purpose: Past studies have focused on psychological and macroeconomic factors as determinants of investor sentiment but the outbreak of the 2019 novel coronavirus disease (COVID-19) pandemic has brought to the fore the need to determine whether the pandemic matter or not, in shaping investors’ sentiment. Hence, this research aims to examine the role of COVID-19 in shaping investors’ sentiment in the Nigerian capital market.

Methodology: In determining whether COVID-19 matters or not in shaping investor sentiment in the Nigerian capital market, this study applied the Vector Error Correction Model (VECM) and Pearson correlation techniques to the analysis of the weekly time series data on covid-19 confirmed (positive), discharged and fatal cases and their relationships as well as impacts on the stock (capital) market investors’ sentiment in Nigeria for the period March 2, 2020, to October 25, 2020.

Findings: This study confirms a weak positive relationship between COVID-19 and investors’ sentiment in the Nigerian stock market. Furthermore, there is evidence that the discharged and fatal cases of COVID-19 have long-run significant positive impacts on investors’ sentiment in Nigeria, unlike the positive case which has a negative significant impact. In the short-run, however, COVID-19 positive cases have positive while discharged and fatal cases have negative non-significant effects on stock market investors’ sentiment in Nigeria.

Practical Implications: It is therefore concluded that COVID-19 cases are significant determinants of investors’ sentiment in the Nigerian stock market such that the effects of the pandemic are significant in shaping stock market investors’ sentiment in the country. It is high time the regulatory authorities, and investment community particularly investors considered the long-run implications of the current COVID-19 pandemic on their behavior and decisions.

Originality/Value: This is one of the very few studies in Nigeria that discount the influence of health pandemics such as COVID-19 on the behavior of investors in the stock market in relation to sentiments.

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Published

2022-08-01

How to Cite

Babarinde, G. F., Adegoke Adewusi, O. ., Idera Abdulmajeed , T. ., & Hassan Haziel, Y. . (2022). INVESTORS’ SENTIMENT IN THE NIGERIAN STOCK MARKET: DOES COVID-19 MATTER?. The International Journal of Accounting and Business Society, 30(2), 87–122. Retrieved from https://ijabs.ub.ac.id/index.php/ijabs/article/view/688