The impact of Corporate Governance quality on the financial performance of South Asian Stock Market

Abstract

The purpose of this study is to analyze the impact of governance quality (including institutions' quality, government actions, and policy uncertainty) on stock performance. Panel data is collected from five South Asian countries (Pakistan, India, Bangladesh, Sri Lanka, and Nepal) for the period of 2000 to 2020. The indexes are based on the governance indicators. Annual stock returns and governance indicators based on country-level data are considered in this study. The findings of the study suggest that governance quality has a positive impact on the stock performance of South Asian countries. High governance quality, institutional quality, and policy certainty result in improved stock performance. The result of this study provides significant implications for government institutions and policymakers in the stock market.