Stock Market Reaction to Covid-19 Lockdown Announcement in Nigeria: An Event Study Approach

The study examined COVID-19 lockdown announcement effect on the Nigerian stock market. The study investigated the extent of the lockdown announcement impact on the Nigerian stock market and examined whether the reaction of the market prior to the lockdown announcement is the same with the post-lockdown period reaction. The research employed the event study methodology and computed the market model for a randomly selected sample of 38 companies listed on the floor of the Nigerian Stock Exchange (NSE). The event window used in the study is 35 days (20 days prior to the lockdown announcement and 15 days after the announcement). The findings of the study showed that there was a positive market reaction during the announcement period and beyond, as significant positive average abnormal returns were recorded in the market all through the lockdown period. Conversely, negative average abnormal returns were recorded prior to the lockdown announcement. The research concluded that, lockdown during the COVID-19 pandemic has a positive significant effect on the performance of stocks in the stock market in Nigeria.