This study investigates the relationship between insider trading and stock price efficiency among firms listed on the Nigerian Exchange Group (NGX) for the period 2010–2025, using an unbalanced panel dataset of 148 listed firms. Drawing on the efficient market hypothesis, information asymmetry theory, and agency theory, the study examines whether insider trading activities enhance or undermine the informational efficiency of stock prices in an emerging market context. Using fixed-effects and random-effects panel regression models, with the Hausman specification test to select the preferred estimator, the study controls for firm size, return on assets (ROA), leverage, Big 4 auditor presence, industry dummies, and year dummies. Results reveal that insider trading has a statistically significant positive association with short-term price discovery but simultaneously exacerbates informational asymmetry, reducing long-run price efficiency for outside investors. Firms audited by Big 4 firms exhibit comparatively higher price efficiency, while leverage is inversely associated with price efficiency. The findings contribute novel empirical evidence from sub-Saharan Africa's most liquid capital market, challenging the conventional wisdom that insider trading uniformly improves price discovery. The study offers actionable policy recommendations for the Securities and Exchange Commission (SEC) Nigeria, the NGX, and corporate governance practitioners.
Onipe Adabenege Yahaya (Thu,) studied this question.
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