Impact of Disclosure Practices on Investment Decision: A Study on Different Parts of Disclosure Index of Listed Conventional Banks in Bangladesh

Md. Solaiman Hossain

doi:10.18034/ajtp.v9i3.627

Authors

Md. Solaiman Hossain Assistant Professor, Department of Accounting and Information Systems, Bangabandhu Sheikh Mujibur Rahman Science and Technology University, Gopalganj, BANGLADESH

DOI:

https://doi.org/10.18034/ajtp.v9i3.627

Keywords:

Unweighted Disclosure Index, Disclosure Score, Investment Decision, Conventional Banks, Bangladesh

Abstract

The purpose of this study is to evaluate the impact that various aspects of the disclosure index have on the decision-making processes that are important to investors. This study created an unweighted disclosure index in eight headings: the corporate profile, corporate governance, workers and social responsibility, risk management, financial performance indicators, income statement, balance sheet, and accounting policy. The individual disclosure of each part of the disclosure index has been calculated. This study also uncovered some problematic aspects of the decision-making process for investors, such as working capital ratio, current ratio, deposit assets ratio, cash deposit ratio, ROE, ROA, dividend payout ratio, and dividend yield ratio. To achieve the study objective, this study has used secondary data extracted from published audited annual reports of ten sample banks in Bangladesh from 2015 to 2019. The ANOVA test and multiple regression analysis with the ordinary least square model (OLS) have been employed to reveal the study findings. The results of the ANOVA test report significant variation in the disclosure scores of different parts of the disclosure index and the various concerned components of investors’ decisions. The results of multiple regression analysis illustrated that the disclosure scores of the other parts of the disclosure index had a significant positive impact on the different concerned components of investors’ decisions.

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