Downside systematic risk in Pakistani stock market: role of corporate governance, financial liberalization and investor sentiment

Purpose The purpose of this paper is to examine the impact corporate governance, investor sentiment and financial liberalization on downside systematic risk interplay socio-political turbulence relationship through static dynamic panel estimation models. Design/methodology/approach evidence based a sample 230 publicly listed non-financial firms from Pakistan Stock Exchange (PSX) over period 2008–2018. Furthermore, study analyzes data Blundell Bond (1998) technique in full as well sub-samples (big small firms). Findings authors document that governance mechanism reduces risk, whereas increase investors’ exposure toward risk. Particularly, results provide some new insights moderator weakens strengthens effect Consistent with prior studies, analysis reveals statistical variations large small-size sampled firms. Theoretically, findings mainly support agency theory, noise trader theory Keynesians hypothesis. Originality/value market volatility has become prime area concern for investors, policymakers regulators emerging economies. Primarily, existence attributed weak irrational behavior participants, liberation policies sociopolitical turbulence. Therefore, present provides simultaneous empirical determine whether hinder or spur an economy. work relates number studies role