Pages: 8-18

Abstract

The gap existing in the contemporary viewpoints of scholars in the developing countries on whether or not there is a causal relationship between market liquidity and corporate performance, necessitated this study. Secondary source of data was employed through the information gathered from the Nigeria Stock Exchange Facts book and financial statements of companies quoted on the Nigerian Stock Exchange. Data collected were analyzed using appropriate inferential and descriptive statistics. The graphical and tabular presentations of trend analysis of the Return on Asset (ROA) showed that for most of the industries, a mix of negative and positive growth rates and outliers occurred due to factors such as changes in policies. Also, turnover ratio for all the companies depicted the same low level behaviours except for Presco plc due to the steep fall in market capitalization resulting from the fall in stock prices of the said companies. Also, it was shown that though there is weak positive correlation between market liquidity and performance, the two do not granger cause each other. Based on the data used in this study, it was revealed that there is zero causal relationship between market liquidity and corporate performance.