Financial reporting quality and share price movement-evidence from listed companies in Bangladesh

Abstract

Purpose The purpose of this study is to examine the effect of financial reporting quality (FRQ) on share price movement (SPM) of listed companies in an emerging and developing economy – Bangladesh. Design/methodology/approach The study analyzed 296 annual reports for the year 2015 and 2016 in examining the effect of FRQ on SPM. Ordinary least squares (OLS) regression model is used to examine the hypothesized relationship among the variables. A modified version of Lang et al. (2003) has been adopted in measuring the SPM. FRQ is measured using the qualitative characteristics approach as defined by the International Financial Reporting Standard Framework and used by Beest et al. (2009) and Braam and Beest (2013). Findings The study finds a positive association (though not significant statistically) between the FRQ and SPM in the country’s leading stock exchange (Dhaka stock exchange). Furthermore, the effect of enhancing quality on SPM is found to be stronger as compared to fundamental quality. Majority of the FRQ constructs demonstrate an improvement in the quality score in the year 2016 as compared to 2015 except for relevance. Research limitations/implications The key limitation of the study is that it focuses only on two years (2015 and 2016) annual reports data in measuring FRQ and its effect on SPM. Originality/value The study uses qualitative characteristics approach in measuring the FRQ and to examine its effect on SPM using the context of an emerging and developing economy – the case of Bangladesh.

Board characteristics and foreign equity ownership: evidence from Bangladesh

“…Dhaka Stock Exchange (DSE) is the earliest stock exchange of the country (originally established as “The East Pakistan Stock Exchange” in 1954). DSE started its operation in 1976 with nine (9) listed companies and a paid up capital of Bangladeshi Taka (BDT) 137.52 million (Rashid, 2020a). In 1993, Bangladesh Securities and Exchange Commission (BSEC) was established and entrusted with the responsibility to regulate the country's capital market operations (Rashid, 2020a).…”

“…DSE started its operation in 1976 with nine (9) listed companies and a paid up capital of Bangladeshi Taka (BDT) 137.52 million (Rashid, 2020a). In 1993, Bangladesh Securities and Exchange Commission (BSEC) was established and entrusted with the responsibility to regulate the country's capital market operations (Rashid, 2020a). Chittagong Stock Exchange (CSE) was established in 1995 as the country's second stock exchange to facilitate trading of securities to the investors of that region.…”

The Moderating Effects of Corporate Social Responsibility on the Relationship between Creative Accounting Determinants and Financial Reporting Quality

“…Corporate social responsibility: the five items that measured corporate social responsibility were mainly based on five items adapted from [3]. Financial reporting quality: this study measured financial reporting quality using 20 items based on the research of [59]. (See Appendix A) Responses were recorded on a 5-point scale ranging from 1, strongly disagree, to 5, strongly agree.…”

Development of A Novel Hybrid Framework for Accounting Information Systems and Mediating Role of Technostress on Organizational Performance

“…Bangladesh, a least developed country (UNCTAD, 2021), has a GNI per capita USD 2,620 and an annual growth rate of 6.94% in 2021 (The World Bank, 2021). Bangladesh was an emerging economy in 2008 (Rashid, 2020) and recently became low and middle-income (Power et al, 2020). Financial Reporting Council (FRC) sets/adopts accounting standards in Bangladesh.…”