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This chapter investigates the relationship between stock pricing and behaviour of the stock market on
one hand and micro and macroeconomic fundamentals in the Nigerian economy on the other from 1980-
2009 using both primary and secondary data. Results from the primary survey indicate that the key
drivers of share prices were neither broad macroeconomic indicators nor key indicators of the health
of the firm. Prices were clearly shown to be much above levels that could have been determined by such
indicators as posted profits of firms, amounts paid out as dividend and its regularity. Secondary data
analysis equally show that the relationship between actual levels of the all share price index for the
period of our analysis and during the financial crisis were not driven by “expected” variables. While
its fundamental values are driven by monetary and relative price variables, actual values are driven by
external sector variables and prices.
