To what Extent did Changes in Stock Prices influence Investors’ Confidence on the Nigerian Stock Exchange

When investors commit more than necessary in the market, it only show how much they trust the growth of the market. But when the market does not growth as fast as the level of commitments of the investors, it becomes necessary to question the motivations of their trust. This is the crux of this research study. Employing the panel least squares to study a panel of fifteen (15) firms that operate in six sub-sectors, this study aims at revealing the major basis of the investors’ confidence in Nigerian stock exchange, especially after the crisis. The six sub-sectors considered in this study are Brewery, Petroleum Marketing, Banking, Insurance, Building Materials, and Food and Beverages. Among the major findings of this study is the fact that investors’ confidence in Nigerian Stock Exchange is mainly driven by the opinion of fellow investors. This opinion of fellow investors on its own is not based on calculated study of the market but on fears and optimisms about the market. This conclusion is based on the fact that the study established that the confidence or loss of confidence of investors in the market was neither influenced by movements of the firms’ fundamentals nor the overall macroeconomic environment. Key Words: Efficient Market Hypothesis, Investors’ Confidence, Capital Assets Pricing Model, Arbitrage Pricing Theory, and Nigerian Stock Exchang