Corporate Governance, Financial Crisis and Stock Liquidity: The Interplay of Governance Compliance and Operating Liquidity


  • Javed khan University of Malakand
  • Shafiq Ur Rehman University of Malakand


This study investigates how corporate governance obedience and economic crunch affect the liquidity of stocks. By employing fixed effects model on a sample of 170 non-financial listed firms of Pakistan for the period 2007-2016, the study finds that governance obedience affects the stock liquidity positively, while it is negatively affected by the global economic crunch. By dividing the sample based on operating liquidity and governance quality, the study further finds that the economic crisis-stock liquidity relationship is influenced by corporate governance quality and operating liquidity. Predominantly, outcomes of the study highlight the eminence of corporate governance obedience and economic crunch in shaping stock liquidity, and signify the value of governance quality and operating liquidity during an economic crisis for Pakistani firms. The results have repercussions for strategy building and investment in Pakistan.

Key Words: economic crunch, stock liquidity, operating liquidity, governance obedience, fixed-effect model.

Author Biographies

Javed khan, University of Malakand

Department of Commerce and Management Science

Shafiq Ur Rehman, University of Malakand


Department of Commerce and Management Sciences


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