Governance Transparency and Stock Market Liquidity in the Nigerian Exchange Group: A Panel Data Analysis

This study investigates the empirical relationship between governance transparency and stock market liquidity for listed companies on the Nigerian Exchange Group. Stock market liquidity, critical for the efficiency of capital allocation and investor welfare, is theorised to be significantly influenced by the quality of governance-related information disclosures. Governance transparency reduces information asymmetry between informed and uninformed market participants, narrowing bid-ask spreads and improving trading volumes. Despite the importance of this relationship for capital market development, the governance-liquidity nexus has not been adequately examined in the context of the Nigerian Exchange Group. Drawing on the market microstructure theory and governance disclosure literature, this study develops a governance transparency index for forty-five listed firms using annual report content analysis and examines its relationship with four liquidity proxies: bid-ask spread, trading volume, Amihud illiquidity ratio, and turnover rate. A panel dataset spanning eight years is analysed using fixed and random effects regression, with endogeneity addressed through instrumental variable techniques. The study addresses a gap in the Nigerian capital market literature by providing evidence on governance as a driver of market microstructure outcomes. Findings will be instructive for the Nigerian Exchange Group, the Securities and Exchange Commission, and listed company investor relations teams seeking to improve market liquidity. Keywords: governance transparency, stock market liquidity, information asymmetry, Nigerian Exchange Group, panel data.