Effect of Information Disclosure on Corporate Performance: Evidence from Companies in Pharmaceuticals and Chemicals Industry Sectors of Dhaka Stock Exchange

Article Sidebar

Full Text Article
Published: 08-05-2023
DOI: https://doi.org/10.3329/dujbst.v42i2.59713
Keywords:
Leverage Ratio (LR), Mandatory Disclosure (MD), Corporate Performance, Return on Assets (ROA), Return on Equity (ROE), Stock Return (SR), Voluntary disclosure (VD), Weighted Index of Disclosure (WID)

Main Article Content

Khaleda Khatun
Department of Finance, University of Dhaka
Tamanna Tabassum
Department of Finance, University of Dhaka

Abstract

In this study we examined if level of corporate disclosure (mandatory, voluntary, and combined) has any impact on firms’ performance (measured in terms of ROA, ROE and stock return) in case of Bangladeshi listed firms. The data from 15 listed companies of pharmaceuticals and chemicals sectors is used covering study period of 10 years (2009-2018). The dataset is analysed using both descriptive statistics and random effect model following the models used by similar studies in other countries. Beside indices of disclosure, some other control variables like sales growth, age of firm, size of firm, leverage ratio, total asset turnover and industrial category of the firm (pharmaceuticals or chemicals) are used in three different models as proxy for returns. The results indicate that firms with higher level of mandatory or combine disclosure have higher ROE or ROA.

Article Details

Issue

Vol. 42 No. 2 (2021): Vol. XLII No. 2, 2021

Section

Articles
Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Articles in the Dhaka University Journal of Business Studies are Open Access articles published under the Creative Commons CC BY-NC-ND License Attribution-NonCommercial-NoDerivatives 4.0 International License

How to Cite

Effect of Information Disclosure on Corporate Performance: Evidence from Companies in Pharmaceuticals and Chemicals Industry Sectors of Dhaka Stock Exchange. (2023). Dhaka University Journal of Business Studies, 42(2), 1-24. https://doi.org/10.3329/dujbst.v42i2.59713

References

Abu-Nassar, M. & Rutherford, B. (1995). Preparers’ attitude to financial reporting in less developed countries with moderately sophisticated capital markets: The case of Jordan. International Journal of Accounting, 30, 129-138.Akben-Selcuk,

Akhtaruddin, M. & Rouf, A. (2012). Corporate governance, cultural factors and voluntary disclosure, evidence from selected companies in Bangladesh. Corporate Board: Role, Duties & Composition, 8(1), 46-58. Retrieved from https://www.virtusinterpress.org/-Corporate-Board-Role-Duties-and-Composition-.html

Akhtaruddin, M. (2005). Corporate manadatory disclosure practices in Bangladesh. International Journal of Accounting, 40(4), 399-422.

Al-Zarouni, A. (2008). Corporate Disclosure in Emerging Markets: the Case of the UAE. Doctoral Dissertation submitted to Griffith University, UK (unpublished).

Barako, D. G., Hancock, P. & Izan, H. Y. (2006). Factors influencing voluntary disclosure by Kenyan companies. Corporate Governance, 14(2), 107-125.

Bruslerie, H. d. & Gabteni, H. (2014). Voluntary disclosure of financial information by French firms: Does the introduction of IFRS matter? Advances in Accounting, 30(2), 367-380.

Bushee, B. J. & Noe, C. F. (2000). Corporate disclosure practices, institutional investors and stock return volatility. Journal of Accounting Research, 37, 171-202.

Cerf, A. R. (1961). Corporate Reporting and Investment Decisions. Barkley: Public Accounting Research Program, Institute of Business and Economic Research, University of California. Retrieved from https://www.coursehero.com/file/p1dac9m/Cerf-A-R-1961-Corporate-Reporting-and-Investment-Decisions-University-of/

CFA Institute. (2013). Financial Reporting Disclosure.Retrieved from cfainstitute.org: https://www.cfainstitute.org/-/media/documents/article/position-paper/financial-reporting-disclosures-investor-perspectives-on-transparency-trust-volume.ashx

Claire L. Marston, P. J. (1991). The use of disclosure indices in accounting research: A review article. The British Accounting Review, 23(2), 195-210.

Cook, T. (1989, June). Voluntary Corporate Disclosure by Swedish Companies. Journal of Interntional Finance and Accounting, 1(2), 171-195.

Craig, R. & Diga, J. (1998). Corporate Accounting Disclosure in ASEAN. Journal of International Financial Management and Accounting, 9(3), 246-274.

Dawd, I. & Charfeddine, L. (2019). Effect of aggregate, mandatory and voluntary disclosure on firm performance in developing market: the case of Kuwait. International Journal of Accounting, Auditing and Performance Evaluation, 15(1), 31-56.

E. (2016). Does Firm Age Affect Profitability? Evidence from Turkey. International Journal of Economic Sciences, 3, 1-9.

EL-Gazzar, S. M., Ornaro, J. M., & Jacob, R. A. (2008). An Examination of the Determinants and Contents of Corporate Voluntary Disclosure of Management’s Responsibilities for Financial Reporting. Journal of Accounting, Auditing and Finance, 23(1), 95-114.

Elshandidy, T., Fraser, I. & Hussainey, K. (2013, December). Aggregated, voluntary, and mandatory risk disclosure incentives: Evidence from UK FTSE all-share companies. International Review of Financial Analysis, 320-333.

Fama, E. F. & French, K. R. (1992). The Cross Section of Expected Stock Returns. The Journal of Finance, 47(2), 427-439.Ferrell, A. (2007). Mandatory Disclosure and Stock returns - Evidence from the Over-the-Counter Market. Journal of Legal Studies, 43(2), 213-251.

Gelb, D. a. (2001). Corporate Social Responsibility and Financial Disclosure: An Alternative Explanation for Increased Disclosure. Journal of Business Ethics, 33, 1-13.

Geroski, P. A., Machin, S. J. & Walters, C. F. (1997). Corporate Growth and Profitability. The Journal of Industrial Economics, 45(2), 171-189.

Griffith.Baltagi, B. H. (2005). Econometric Analysis of Panel Data (3rd ed). West Sussex: John Wiley and Sons.

Jensen, M. &. (1984). The Theory of Corporate Finance: A Historical Overview. In M. &. Jensen, The Modern Theory of Corporate Finance (edt) (pp. 2-20). New York: McGraw-Hill Inc.

Jiao, Y. (2011). Corporate disclosure, market valuation and firm performance. Finance Management, 40(3), 647-676.

Karim, A. (1998). Financial Reporting in Bangladesh: The Regulatory Framework. Journal of Business Administration, 1(2), 57-88.

Kusumawati, D. (2006, December). Profitability and corporate governance disclosure: an Indonesian study. Simposium Nasional Akuntansi Padahg, 23-26 Augusts (pp. 1-19). Jakarta: SSRN.

Lazar, S. (2016). Determinants of Firm Performance: Evidence from Romanian Listed Companies. Review of Economic and Business Studies, 9(1), 53-69.

Li, Y.-Y., Liu, Y.-C. A. & and Hsu, A.-C. (2014). The Effect of Information Disclosure on Corporate Performance: The Case of Taiwan. Information Technology Journal, 13(1), pp. 2079 - 2089.

Modugu, K. P. & Eboigbe, S. U. (2017). Corporate Attributes and Corporate Disclosure Level of Listed Companies in Nigeria: A Post-IFRS Adoption Study. Journal of Finance and Accounting, 5(2), 44-52.

Modugu, K. P. (2017). Firm Performance and Corporate Disclosure Level of Listed Companies in Nigeria. Asian Journal of Finance & Accounting, 9(2), 71-87.

Nidhi, S. S. & Verma, A. (2017). Corporate Disclosures and Financial Performance of Selected Indian Manufacturing and Non- Manufacturing Companies. Accounting and Finance Research, 6(1), 119-132.

Rahman, M., Sarker, M. & Uddin, M. (2019). The Impact of Capital Structure on the Profitability of Publicly Traded Manufacturing Firms in Bangladesh. Journal of Applied Economics and Finance, 6(2), 1-5.

Shapiro, A. & Titman, S. (1986). An Integrated Approach to Corporate Risk Management. In J. Stern, & D. Chew, The Revolution in Corporate Finance (Eds.) (pp. 215-229). Oxford: Blackwell Publishers Ltd.

Singhvi, S. S. & Desai, H. V. (1971). An empirical analysis learning of the quality of corporate financial disclosure. Accounting Review, 46, 129-138.

Sternberg, E. (1997). The Defects of Stakeholder Theory. Corporate Governance: An International Review, 5(1), 4-10.

Sultana, N. M. (2018). Disclosure Practices by Financial Sector Companies-Evidence from Bangladeshi Listed Companies. Dhaka University Journal of Business Studies: Special International Edition, 3(2), 1-32.

Wang, H. C. (2008). To little or too much? Untangling the relationship between corporate philanthropy and firm financial performance. Organization Science, 19(1), 142-159.

Wilner, B. (2000). The exploitation of relationships in financial distress: The case of trade credit’, Journal of Finance, 55(1), 153-163.

Similar Articles

You may also start an advanced similarity search for this article.