Working capital management plays centric role in enhancing operational efficiency and their ultimate profitability. Globally financial managers have been searching the proper way on how to utilize working capital components which prolong profitability. The purpose of this study is to assess the impact of working capital components on profitability indicators of selected pharmaceutical firms in Bangladesh. The paper used financial data of 9 pharmaceutical firms listed in Dhaka stock exchange (DSE) covered 2011-2015. Two methods were used in this study for analysis data set. Firstly, to measure the relationship between selected variables Pearson Correlation matrix was used. Secondly, multiple regression analysis was used to investigate the impact working capital components on profitability of selected pharmaceutical firms. The study also conducted Durbin Watson test to assess autocorrelation of selected variables. In this study the correlation matrix identified a negative correlation between working capital components and profitability, whereas regression analysis found number of days account receivable (AR) had significant positive and current ratio (CR) and debt ratio (DR) had appeared a significant negative impact on profitability.
This paper investigates empirical existence of theories of IPO underpricing in Bangladesh. The study based on IPO listed at Dhaka Stock Exchange (DSE) from 2003 to 2013 analyses Level of IPO underpricing and its determinants. OLS regression is used to distinguish the relationship between various independent variables with dependent variable-level of underpricing. The result reveals that market capitalization, underwriter's reputation, oversubscription rate, offer size, float, ownership retention and method of issue have significant effect on the level of IPO underpricing, whereas size of the firm and offer timing has very little explanatory power. The significant effect of these variables identifies the presence of signaling theory, agency theory, winners curse theory, anchoring theory and impresario hypothesis in IPO pricing where signaling theory is most prominent one in deciding IPO underpricing in Bangladesh.
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II.Reasons for IPO Underpricing:2.1 Asymmetric Information Theory: a. Adverse Selection(winners curse) model: Adverse selection model initiated by Rock (1986) identifying informational asymmetry between informed and uninformed investors where uninformed investors knows only unconditional mean value of the IPO and its lead to a lemon problem-uninformed investors end up with bad IPOs. So the issuing firm deliberately underprices the offerings to attract uninformed investors. b. Moral Hazard Model: Baron (1982) developed a theory assuming an investor banker is more and better informed than the issuer because issuer cannot perform distribution services unlike an underwriter's. Hence, there should be compensation in the form of underpricing in the presence of asymmetric information.
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