Does Governance Quality Enhance Stock Market Performance: Empirical Evidence from Pakistan
DOI:
https://doi.org/10.47067/ramss.v5i2.229Keywords:
Governance, Stock Market Performance, ARDL, PakistanAbstract
The current study examined the impact of governance on stock market performance in Pakistan. The study employed the ARDL model using Pakistani data with complete relevant data for the period spanning from 1996 to 2018. The study reveals that quality of governance as captured by voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, the rule of law, and control of corruption positively affect stock market performance. The findings suggest countries with better developed political systems would favor stock markets with higher market capitalization, better turnover ratios, higher value in shares traded, and a greater number of listed companies.
References
Ahlin, C., & Pang, J. (2008). Are financial development and corruption control substitutes in promoting growth? Journal of Development Economics, 86(2), 414-433.
Albuquerque, C. P., Smolka, M. B., Payne, S. H., Bafna, V., Eng, J., & Zhou, H. (2008). A multidimensional chromatography technology for in-depth phosphoproteome analysis. Molecular & Cellular Proteomics, 7(7), 1389-1396.
Ayayd?n, H., & Baltac?, N. (2013). Corruption, banking sector, and stock market development: A panel data analysis.
Bailey, W., & Chung, Y. P. (1995). Exchange rate fluctuations, political risk, and stock returns: Some evidence from an emerging market. Journal of financial and quantitative analysis, 30(4), 541-561.
Bakshi, G. S., & Chen, Z. (1994). Baby boom, population aging, and capital markets. Journal of business, 165-202.
Bekaert, G., Erb, C. B., Harvey, C. R., & Viskanta, T. E. (1998). Distributional characteristics of emerging market returns and asset allocation. Journal of Portfolio Management, 24(2), 102-+.
Bhagat, S., & Bolton, B. (2008). Corporate governance and firm performance. Journal of corporate finance, 14(3), 257-273.
Brooks, G. (2016). Criminology of corruption: Theoretical approaches. Springer.
Campbell, J. Y., & Shiller, R. J. (2001). Valuation ratios and the long-run stock market outlook: An update.
Coulibaly, S., Kamsu-Foguem, B., Kamissoko, D., & Traore, D. (2019). Deep neural networks with transfer learning in millet crop images. Computers in Industry, 108, 115-120.
Daouk, H., Lee, C. M., & Ng, D. (2006). Capital market governance: How do security laws affect market performance? Journal of Corporate Finance, 12(3), 560-593.
De Groot, C. G., & Verschoor, W. F. (2002). Further evidence on Asian stock return behavior. Emerging Markets Review, 3(2), 179-193.
Gendreau, B. C., & Heckman, L. (2003). Sovereign spreads and emerging market equity returns. The Journal of Portfolio Management, 30(1), 104-114.
Harvey, C. R. (1995). Predictable risk and returns in emerging markets. The review of financial studies, 8(3), 773-816.
Hooper, D., Blasi, P., & Serpico, P. D. (2009). Pulsars as the sources of high energy cosmic ray positrons. Journal of Cosmology and Astroparticle Physics, 2009(01), 025.
Hussain, A., Malik, M. Y., Khan, M., & Salahuddin, T. (2019). Application of generalized Fourier heat conduction law on MHD viscoinelastic fluid flow over stretching surface. International Journal of Numerical Methods for Heat & Fluid Flow.
Keita, E., Bessaies-Bey, H., Zuo, W., Belin, P., & Roussel, N. (2019). Weak bond strength between successive layers in extrusion-based additive manufacturing: measurement and physical origin. Cement and Concrete Research, 123, 105787.
Lambsdorff, J. G. (2003). How corruption affects persistent capital flows. Economics of Governance, 4(3), 229-243.
Levine, R., & Zervos, S. (1996). Stock market development and long-run growth. The world bank economic review, 10(2), 323-339.
Lombardo, D., & Pagano, M. (2002). Law and equity markets: A simple model. Corporate governance regimes: Convergence and diversity, 343-362.
Maroney, N., Naka, A., & Wansi, T. (2004). Changing risk, return, and leverage: The 1997 Asian financial crisis. Journal of Financial and Quantitative Analysis, 39(1), 143-166.
Matadeen, S. J. (2017). The macroeconomic determinants of stock market development from an African perspective. Theoretical Economics Letters, 7(7), 1950-1964.
Narayan, P. K., & Gupta, R. (2015). Has oil price predicted stock returns for over a century? Energy Economics, 48, 18-23.
Voyer, P. A., & Beamish, P. W. (2004). The effect of corruption on Japanese foreign direct investment. Journal of Business Ethics, 50(3), 211-224.
Wie, T. K. (2000). The impact of the economic crisis on Indonesia's manufacturing sector. The Developing Economies, 38(4), 420-453.
Zaremba, A., Umar, Z., & Mikutowski, M. (2019). Inflation hedging with commodities: A wavelet analysis of seven centuries worth of data. Economics Letters, 181, 90-94.
