Exploring The Nexus Between Corporate Governance Mechanism and Stock Price Crash Risk: An Empirical Evidence of Emerging Economies

Abstract

The purpose of this study is to check the relationship between corporate governance and stock price crash risk. This study has been done in the context of Pakistan and India. The data was collected from two different economies, i.e. India and Pakistan. The reason for selecting these economies is these both economies are part of the SCO, and they are neighbouring countries with similar investment culture. The data was collected for 13 years from 2011 to 2023. The results show that corporate governance has a negative effect on stock price crash risk. When including information asymmetry as a control variable, the sign converts to positive, it shows that corporate governance itself doesn’t effect stock price crash. This study contributed in the literature in such a way that this is one of the studies where direct and indirect relationships have been tested.