Abstract
An empirical analysis of obligatory disclosure by 94 Bangladeshi listed businesses is presented here. It also shows how company-specific features affect obligatory disclosure of sample Corporate. The findings show that corporations have generally failed to comply with regulatory disclosure obligations.
Companies reveal 44% of information, indicating that current restrictions are inadequate at monitoring disclosure compliance. Company age seems to be unimportant for obligatory disclosure. Unless measured by revenue, industry size does not indicate mandated disclosure.
Then it matters little. Disclosure was similarly unaffected by profitability. Mandatory disclosure is unaffected by a company’s status, whether contemporary or traditional.
Introduction
Many researchers have focused on corporate disclosure in recent years. Stakeholder, agency, legitimacy, and political economy theories explain why firms reveal information (Choi, 1973). Although theoretical perspectives disagree, all agree that companies release information mostly for traditional user groups like shareholders, creditors, financial analysts, and security consultants who use it to make investment decisions.
The agency hypothesis suggests corporations boost information to reduce shareholder-manager conflicts. Disclosure may also boost corporate value (Lobo & Zhou, 2001). However, regulators may push corporate transparency.
Companies disclose their annual reports via statements or notes. Companies utilize medial release, interim reporting, letters to shareholders, and staff reports to disclose information, but the annual report is the main source for diverse user-groups. However, not all annual report consumers value all sections.
Investors like the income statement, while bankers and creditors prefer the cash flow statement and balance sheet. Users of accounting information consider audit reports, directors’ reports, accounting rules, and historical summary differently. The annual report should help readers make good judgments and manage precious resources efficiently.
Corporate transparency and capital market development have been extensively studied. Corporate openness and disclosure have gained relevance since Enron’s demise in the US. Effective information flow between the firm and its stakeholders is crucial to capital markets. Share marketability, business image, and capital cost may be improved by information disclosure (Meek, Roberts, & Gray, 1995).
Companies provide information to avoid image damage (Choi, 1973). Company disclosures follow laws (Alam, 1989, Karim et al., 1998). Brownlee et al. (1990) suggest that regulatory bodies should prioritize complete and fair disclosure above accounting methodologies used to quantify or report economic activities. Disclosure and reporting obligations for all Bangladeshi corporations are outlined in the corporations Act 1994 (Government of Bangladesh, 1993).
Companies must produce financial statements to show their accurate and fair financial situation under the Act. The Securities and Exchange Commission (SEC), another regulator, mandates listed businesses to follow ICAB accounting standards and its own disclosure requirements (Government of Bangladesh, 1993).
Disclosure rules of the Security Exchange Rules apply solely to stock exchange-listed corporations. However, business annual reports are frequently accused of not meeting regulatory agency disclosure standards, resulting in low disclosure compliance by listed companies.
Significant research (e.g., Benjamin & Stanga, 1977, Cooke, 1989, Inchausti, 1997, Lang & Lundholm, 1993, Meek et al., 1995, Singhvi & Desai, 1971, Wallace et al., 1994) has been done to better understand Western disclosure practices. We know little about this phenomena in poor nations, especially Bangladesh.
Research has largely focused on voluntary disclosures. Mandatory disclosures have received minimal empirical research since the 1994 Companies Act. Hossain and Taylor (1998) utilized pre-Companies Act 1994 company reports again. Hossain (2000) examined Bangladesh’s IAS compliance. He discovered that Bangladesh seldom follows the Companies Act 1994, stock market disclosure standards, and authorized IASs.
This article examines Bangladeshi listed businesses’ disclosure methods to evaluate whether they follow the three regulatory organizations’ standards. Additionally, it explores how firm factors affect disclosure. Listed firms, investors, and norm setters will be interested in the study’s conclusions.
The paper’s organization continues below. The Bangladeshi disclosure regulatory framework is covered in Section 2. Section 3 reviews the literature and creates research hypotheses. Section 4 describes the research approach. Section 5 shows outcomes. Section 6 concludes with policy implications, limits, and further research.
Legal foundation for Corporate disclosure
Corporate reports comply with reporting and disclosure regulations since they must give basic information to evaluate securities. Every nation has its own business report disclosure regulations. Corporate disclosure in Bangladesh is regulated by many laws. Companies limited by liabilities follow the Companies Act 1994.
Literature review, supposition
Global demand for disclosed financial information of corporations has risen as people become more knowledgeable. Disclosure doesn’t always benefit consumers since management typically consider their own interests while making decisions. The principal–agent problem—the disparity between anticipated and actual disclosures—may increase due to this. Better transparency narrows the gap between.
Sample selection
This analysis includes DSE and CSE-listed firms. There were 212 stock exchange-listed firms in 1999. These 11 industries include banking, engineering, food and associated goods, pharmaceuticals and chemicals, paper and printing, fuel, jute, service and real estates, insurance, and miscellaneous. Since the survey solely includes non-financial industrial enterprises.
Age-related disclosure and performance
Dhaka and Chittagong Stock Exchange firms are included in this research. The stock exchanges had 212 businesses in 1999. Banks, engineering, food and associated goods, pharmaceuticals and chemicals, paper and printing, gasoline, jute, service and real estates, insurance, and miscellaneous are the 11 categories. Since only non-financial industrial enterprises are studied,
Conclusions, limits, and research ideas
This research examines Bangladeshi listed firms’ mandated disclosure. The elements that affect required disclosure are also examined. Bangladeshi corporations’ corporate transparency would improve with the results. The research indicates that many company annual reports fail Bangladeshi regulatory transparency standards.
