CHAPTER ONE:
INTRODUCTION
1.1 Background to the Study
For any economy to remain afloat in its bid for survival m today’s globalization, deregulation and liberalization of markets, it needs to have an efficient financial system to direct the allocation of its resources capital markets and institutions, of which the stock exchange is an integral part of and have become of, paramount importance in a dynamic economy as Nigeria
The capital market is a sub-set of financial system that provides the accelerated growth of the economy. This is done by efficiently channeling fund from investors into productive sectors of the economy. It serves as an avenue for government and companies to raise long-term funds to finance their activities (Nwankwo, 2000). The capital market consists of a network of institutions and individuals comprised of regulators and operators who, together, facilitate the smooth operation of the market. In other words, the capital market comprises providers of funds (investors), users of funds (companies and governments), intermediaries (stock brokers, issuing houses, registrars) and regulators (SEC, the Nigerian Stock Exchange and Central Bank of Nigeria). The Nigerian Capital Market is made up of basically two components: the primary and secondary market. The initial sale of securities from the issuing corporation or government to the investor is done in the primary market (yisa, 2001). The issuers uses the funds raised to expand production, build infrastructures and the like very few investors can be persuaded to tie up their funds indefinitely.
Therefore, securities are usually negotiable, enabling the initial buyers to re-offer the securities to any interested party at any prices which is mutual satisfactory. It is, therefore, a function of securities exchange to provide an arena where such mutually satisfactory prices may be determined. It is in this regard that it becomes important to analyze the stock pricing function of the Nigerian capital market, with reference to buyers’ behavior. Osuagwu, (2006) describes buyer behavior as the behavior customer’s or client’s will display in searching for, buying, using, evaluating and disposing-off products, services and ideas which they expect will satisfy their needs and wants. This makes buyer behavior a study of how individuals make decisions to spend their resources on consumption – related items and their evaluation of such purchase decisions. This study therefore appraises the impact of stock pricing on buyers behavior in the Nigerian capital market.