Environmental pollution, trade balance, human development index, foreign direct investment, and natural resources rent impacts on initial public offering (IPO) variability in Pakistan: using asymmetric nardl co-integration approach

This study looked at the asymmetric (nonlinear) links between Pakistan’s environmental pollution, trade balance, human development index, foreign direct investment, natural resource rent, and IPO variability. The research used an annual data set from 1992 to 2019 and applied a unique co-integrating method known as asymmetric ARDL co-integration approach. The macroeconomic variables of environmental pollution, trade balance, human development index, foreign direct investment, and natural resource rent were found to have significant influences on IPO variability in both long-run and short-run asymmetric impacts. These findings highlight the important roles of the used variables in increasing IPO variability. This research suggests that Pakistan’s weak macroeconomic conditions reflect the country’s inadequate capital market growth. The country’s lower IPO variability indicates a lack of trust among potential issuers and investors as a result of Pakistan’s weak macroeconomic indices. The determined asymmetric results may be valuable for Pakistan’s policymaking and stock market forecasting. Ignoring fundamental asymmetries may lead to misrepresentations of the implications.