Akhtaruddin 2005 Research

The International Journal of Accounting
40 (2005) 399 – 422
Corporate mandatory disclosure practices

in Bangladesh
M. Akhtaruddin
School of Management, University Science Malaysia, USM-11800, Pulau Pinang, Malaysia
Abstract
This study reports the results of an empirical investigation of the extent of mandatory disclosure
by 94 listed companies in Bangladesh. It also reports the results of the association between company-
specific characteristics and mandatory disclosure of the sample companies. The results indicate that
companies in general have not responded adequately to the mandatory disclosure requirements of the
regulatory bodies. It has been found that companies, on average, disclose 44% of the items of
information, which leads to the conclusion that prevailing regulations are ineffective monitors of
disclosure compliance by companies. Company age appears to be an insignificant factor for
mandatory disclosure. And there is little support for industry size as a predictor of mandatory
disclosure except where size is measured by sales. Then it is marginally significant. Profitability was
also found to have no effect on disclosure. And status, i.e., whether a company is modern or
traditional also has no effect on mandatory disclosure.
D 2005 University of Illinois. All rights reserved.
Keywords: Bangladesh; Mandatory disclosure; Annual report; Disclosure index; Regulatory framework;
Information; Listed companies
1. Introduction
In recent years, the issue of corporate disclosure has received a great deal of attention
from many researchers (for example, see Benjamin & Stanga, 1977; Carol & Pownall, 1994;
Cooke, 1989; Forker, 1992; Inchausti, 1997; Ingram & Frazier, 1980; Lang & Lundholm,
1993; Singhvi & Desai, 1971; Wallace, 1988). Why corporations should and do disclose
information is articulated in various theories, namely, stakeholder theory, agency theory,
E-mail addresses: akhtar@usm.my, akhtar249@yahoo.com.
0020-7063/$30.00 D 2005 University of Illinois. All rights reserved.

doi:10.1016/j.intacc.2005.09.007
400 M. Akhtaruddin / The International Journal of Accounting 40 (2005) 399–422
legitimacy theory, and political economy theory (Choi, 1973). While different theoretical
perspectives make different arguments, they all agree that companies release information
mostly for traditional user groups such as shareholders, creditors, financial analysts, and
security consultants who find this information useful when making investment decisions
(Cooke, 1989). The agency theory implies that companies increase disclosure in order to
mitigate conflicts between shareholders and managers. In addition, companies wishing to
enhance their firm value may do so by increased disclosure (Lobo & Zhou, 2001). Corporate
disclosure is, however, subject to potential pressures from regulatory bodies.
Disclosure is generally made in company annual reports through the statements or
accompanying notes. Although other means of releasing information, such as medial
release, interim reporting, letters to shareholders, and employee reports, are used by the
companies, the annual report is considered to be the major source of information to various
user-groups (Marston & Shrives, 1991). Nevertheless, all parts of the annual reports are not
equally important to all users. The income statement is believed to be the section most
preferred by investors, whereas cash flow statement and balance sheet are the most useful
sections to bankers and creditors (Eccles & Mavrinac, 1995; Ho & Wong, 2001). Likewise,
users of accounting information weight audit reports, directors’ reports, accounting
policies, and historical summary differently. The annual report should contain information
that will allow its users to make correct decisions and efficient use of scarce resources.
Much prior research has focused on corporate transparency and capital market
development. Since the fall of Enron in the United States, there has been a wider
recognition of the importance of corporate transparency and disclosure. The effective
functioning of capital markets, however, significantly depends on the effective flow of
information between the company and its stakeholders. Information disclosure is seen as a
means to improve marketability of shares, to enhance corporate image, and to reduce the
cost of capital (Meek, Roberts, & Gray, 1995). Companies provide information on the
ground that such disclosure will not respond to the negative impact on the company image
(Choi, 1973). It is seen that a company discloses information in line with legislative
frameworks (Alam, 1989; Karim et al., 1998). Brownlee et al. (1990) argue that regulatory
agencies should be more concerned with the full and fair disclosure of information than
with the specific accounting methods used to measure or report economic transactions.
The Companies Act 1994 provides the basic requirements for disclosure and reporting
applicable to all companies incorporated in Bangladesh (Government of Bangladesh,
1993). The Act requires companies to prepare financial statements in order to reflect a true
and fair view of the state of affairs of the company. The Securities and Exchange
Commission (SEC), another regulatory body, requires all listed companies to comply with
accounting standards promulgated by the Institute of Chartered Accountants of
Bangladesh (ICAB), in addition to its own disclosure provisions (Government of
Bangladesh, 1993). Disclosure provisions of the Security Exchange Rules are, in fact,
restricted only to companies listed on the stock exchanges. It is often alleged, however,
that company annual reports do not comply with the disclosure requirements stipulated by
the regulatory agencies, resulting in poor disclosure compliance by the listed company
(Ahmed & Nicholls, 1994; Hossain, 2000; Karim, 1996).
Considerable research (e.g., Benjamin & Stanga, 1977; Cooke, 1989; Inchausti, 1997;
Lang & Lundholm, 1993; Meek et al., 1995; Singhvi & Desai, 1971; Wallace, Naser, &
M. Akhtaruddin / The International Journal of Accounting 40 (2005) 399–422 401
Mora, 1994) has been undertaken in the recent past to enhance our understanding of the
factors influencing disclosure practices in Western society. Little is known about this
phenomenon in developing countries, particularly in Bangladesh. Moreover, prior research
focuses mostly on voluntary disclosures. There is little empirical evidence that looks
explicitly at mandatory disclosures, especially since the 1994 Companies Act. Again,
Hossain and Taylor (1998) used company reports that were prepared before the enactment
of the Companies Act 1994. On the other hand, Hossain (2000) specifically investigated
the compliance of International Accounting Standards (IASs) adopted in Bangladesh. He
found that compliance with the disclosure practices mandated by the three regulatory
bodies (Companies Act 1994, disclosure requirements of the stock exchange, and the
approved IASs) in Bangladesh is rare.
This paper investigates the disclosure practices of listed companies in Bangladesh to
see how they comply with mandatory rules established by the three regulatory bodies. In
addition, it examines the association between company characteristics and the extent of
disclosure. The findings of the study would be of immense interest to listed companies,
investors, and those involved in standard setting processes.
The remainder of the paper is organized as follows. Section 2 discusses the regulatory
framework for disclosure in Bangladesh. Section 3 presents a review of the literature and
develops the study’s hypotheses. The research method is outlined in Section 4. Section 5
presents the results. Finally, Section 6 presents the conclusions, possible policy
implications of the results, potential limitations and directions for future research.
2. The legal framework for disclosure
Corporate reports generally include information in conformity with reporting and

disclosure laws, because laws require them to provide minimum amount of information
to facilitate evaluation of the securities. Every country, in general, has its own regulatory
framework that governs disclosure in corporate reports within that country. In
Bangladesh, corporate disclosure is governed by a number of statutes. For example,
companies limited by liabilities are guided by the Companies Act 1994. The extent and
nature of disclosures of the listed companies are influenced by Securities and Exchange
(SEC) Rules 1987 (Government of Bangladesh, 1987), the IASs adopted by the Institute
of Chartered Accountants of Bangladesh (ICAB) and the disclosure provision of the
Companies Act 1994 (Government of Bangladesh, 1994). These three regulatory bodies
provide the framework for corporate disclosures in Bangladesh. There is, however, no
one set of generally accepted standards based on these three sources. Again, industries
like railways, electricity, insurance, and banks have their own distinct regulations that
govern disclosures in their annual reports. Disclosures are also influenced by
Nationalized Order, 1972, Banking Companies Act (Government of Bangladesh,
1991), and Income Tax Ordinance 1984 (Government of Bangladesh, 1984). Like other
countries of this region, Bangladesh adopted the Companies Act 1913 of the then British
India. This Act was in force in Bangladesh before the promulgation of the Companies
Act of 1994, which is largely influenced by the British Companies Act. The Companies
Act 1913 required limited public companies to submit an annual balance sheet containing
a summary of their capital, liabilities, and assets. But no specific formats were
prescribed. Profit and loss accounts were prepared without mentioning the nature of
activities in detail. These two statements needed to be audited and presented at the annual
general meeting for approval prior to publication. The fundamental weakness of the
regulation is that it does not provide any guidelines regarding the contents or how the
value of the respective items has been arrived at. The Companies Act 1994 made major
alternations to the financial reporting practices and disclosures of limited liability
companies (Ahmed & Kabir, 1995). Under the new law both statements also have to be
audited and reported before the annual general meeting. The statements can be prepared
either horizontally or vertically. The law requires that fixed assets are to be shown at cost
or valuation. The provisions for depreciation are the annual charge to be disclosed
separately. The required disclosures are classified and specified in far more detail and
include reserves and the changes that occurred during the year, director’s remuneration,
commission, tax provision, and the flow of foreign currency. Section 185 of the
Companies Act provided mandatory items to be disclosed on the balance sheet and
income statement and Section 186 provides a list of information items that must be
disclosed in the director’s report (Government of Bangladesh, 1994). Legislative
requirements prior to 1994, however, failed to indicate the actual level of corporate
disclosure. No particular formats were prescribed and even the necessary contents of the
accounting reports were not specified. In contrast, the Companies Act 1994 included
many provisions, which are mandatory and, some of those are also required by the
approved IASs (Hossain & Taylor, 1998).
The accounting profession in Bangladesh is guided by two professional institutes,
namely, the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of
Cost and Management Accountants of Bangladesh (ICMAB). The financial audit is done
by members of ICAB and the cost audit by members of ICMAB. However, both are under
the control of the Ministry of Commerce Bangladesh. The two institutes are run and
managed by council members, who are elected internally, and representatives from the
government. The council is responsible for the development of the accounting profession
in Bangladesh. Moreover, the ICAB has been given the sole authority to develop and issue
accounting and reporting standards and to monitor their application throughout the
country.
Stock exchange authority governs disclosure in company reports as a part of listing
requirements. At the time of independence in 1971, Bangladesh inherited only one stock
exchange, the Dhaka Stock Exchange (DSE). It was formed in 1954 and registered as a
limited liability company. The Chittagong Stock Exchange (CSE), another stock exchange
of the country, was set up in 1999 and functions in Chittagong. Both stock exchanges are
regulated under the Securities and Exchange Rules 1987 and the Companies Act. Stock
exchange companies must disclose the following information in compliance with SEC
regulations: company history, outline of business, profile of top employees, profile of
directors, information on capital, changes in share capital, number and types of
shareholders, audited financial statements, consolidated statements, post-balance-sheet
events, holdings in associate and subsidiary companies with relative percentage and
payment of dividends. The stock exchange thus places a continuing disclosure and
reporting obligation on listed companies. Security exchange authority has, therefore, a
positive role in determining the level of disclosure in company reports (Wallace & Naser,
1995).
It is recognized that IASs issued by the International Accounting Standards Committee
(IASC, 2001) have made important contributions toward harmonization in accounting and
reporting practices in individual countries. The IASC has, however, no authority to enforce
the accounting practices of its member countries. The implementation of accounting
standards is left to the local accountancy bodies. In countries where professional
accounting institutions are not strong, the implementation of accounting standards will not
be effective. The professional bodies may persuade the government to amend the law so
that the standards issued by the IASC can be adopted. It should be noted that IASC was
reconstituted (April 01, 2001) and is now known as the International Accounting
Standards Board (IASB). The Institute of Chartered Accountants of Bangladesh as a
member of this body (IASB) is entrusted with the task of adoption and enforcement of
standards in Bangladesh. The Technical and Research Committee of the ICAB selects,
reviews, and modifies the standards, where necessary, to conform to local requirements.
Members of the ICAB comply with the adopted accounting standards and disclosure
provisions of the Companies Act, as well as the disclosure requirements of the stock
exchanges. Like the IASC, the ICAB are, however, recommendatory in nature, as the
ICAB has no legislative power to enforce compliance with the disclosure requirements of
the accounting standards they issue (Hossain, 2000). Since members of the ICAB are kept
constantly aware of the development of accounting and auditing standards, they therefore
contribute to the improvement of financial reporting in Bangladesh. Once accounting
standards adopted by the ICAB gain mandatory status through the SEC’s directives they
become applicable to all listed companies. Specifically, all listed companies are to abide by
accounting standards adopted by the ICAB and hence, accounting standards are mandatory
only for the companies listed on the stock exchange.
The SEC in Bangladesh plays a central role in monitoring and enforcing mandatory
disclosure compliance of listed companies. Listed companies are required to prepare
financial statements in accordance with the approved IASs along with the disclosure
provisions of the Companies Act and the stock exchanges. The SEC also prescribes penal
provisions for non-compliance. These include: barring the auditor who conducted the non-
complying audit from acting as an auditor for a listed company for a period of up to five
years; fining the auditor and the company officer up to one thousand taka for non-
compliance with stipulated provisions under the Companies Act. Like the U.S. Securities
and Exchange Commission (SEC), the SEC in Bangladesh uses a review process to
monitor and enforce compliance with mandatory disclosure requirements. The primary
objectives of monitoring company annual reports are to examine whether they adhere to
regulatory frameworks and to encourage compliance. In contrast to the U.S. SEC that uses
a hard approach, the SEC in Bangladesh employs a lenient approach to enforce
compliance. The weak enforcement approach of the SEC may lead to the withholding of
mandatory disclosure information. To enforce existing rules, the SEC Bangladesh has the
power to suspend companies or remove their listing privileges if they do not comply with
the listing requirements. The power to reward the reporting entity is also embedded in the
enforcement process. Since the SEC Bangladesh hardly ever imposes sanctions for non-
compliance of mandatory disclosures, better enforcement procedures appear warranted.
3. Literature review and hypothesis development
The demand for published financial information of companies has increased worldwide
as users of the information become more aware. But often disclosure does not serve the need
of the users because managers are likely to consider their own interests when exercising
managerial discretion. In fact, this might enhance the disclosure gap—the difference
between expected and actual disclosures, also known as the principal–agent problems. In
other words, improved disclosure reduces the gap between management and the outside
world, enhances the value of stock in the capital market, increases liquidity, reduces cost,
and so on (Cooke, 1989; Hossain, 2000; Karim, 1996). One striking feature in corporate
reporting is that a company generally provides information to discharge specific
obligations: to society, investor, supplier, creditors, and legal authorities. However, the
decision to provide or not provide certain information is likely to be influenced by a variety
of factors. Prior research has examined factors like size, profitability, and listing status to
find out their links with disclosure. Cooke (1989), for example, examines three categories of
companies, namely, unlisted, listed, and multiple listed, and suggests that disclosure is
lower for unlisted companies than listed companies, and that disclosure by listed companies
is lower than that of multiple listed companies. Lang and Lundholm (1993) suggest that
disclosures are higher for larger firms. Lobo and Zhou (2001) demonstrate that companies
that are performing well are likely to provide more information than poorly performing
companies. Also, cultural value is no less important a determinant of disclosure. For
example, in countries, which support a culture that has a high sense of secrecy, management
is less likely to pursue a high level of disclosure (Gray & Vint, 1995). Earlier research has
examined various company attributes and their association to the levels of disclosure. The
present study focuses on the level of disclosure in relation to the age, size, status, and
profitability of the companies. Additionally, prior studies (Owusu-Ansah, 1998; Wallace &
Naser, 1995) define mandatory disclosure as the presentation of a minimum amount of
information required by laws, stock exchanges, and the accounting standards setting body to
facilitate evaluation of securities. Similarly, the present study concentrates on mandatory
disclosure for items of information required by the Companies Act 1994, the listing rules of
the stock exchanges, and the approved IASs that listed companies in Bangladesh to disclose
those in their annual reports.
3.1. Size
Prior studies have identified size as significantly associated with the level of disclosure
(Cooke, 1989; Hossain, 2000; Lang & Lundholm, 1993; Owusu-Ansah, 1998). The size
variables considered in these studies include sales, total assets, number of employees, and
number of shareholdings. In the present study, the size of the company was determined by
taking into account the capital employed and the annual sales of the company. Capital
employed is the total of net worth and long term loans. Alternatively, it is defined as total
of fixed assets (net of depreciation) and net working capital, or total net assets less current
liabilities. Sales as a proxy for size, is equal to net annual sales.
Consistent with prior research, it is hypothesized that there is a significant association
between company size and the extent of disclosure. Larger companies may tend to disclose
more information than smaller companies in their annual reports due to their competitive
cost advantage (Lang & Lundholm, 1993; Lobo & Zhou, 2001).
3.2. Age
For this study, I conjecture that company age is a critical factor in determining the
level of corporate disclosure. Older companies with more experience are likely to
include more information in their annual reports in order to enhance their reputation and
image in the market. Thus, I infer a positive association between the age of the
company and the level of disclosure. That is, old companies disclose information to
a greater extent than that of new companies. Companies are classified into three
categories for this variable: companies registered prior to 1 January 1972 are grouped as
bvery oldQ companies; companies registered after 1 January 1972 but before 1 January
1986 are boldQ companies; and companies registered after 31 December 1985 are bnewQ
companies.
3.3. Industry type
Association between the level of disclosure and industry types provides mixed
evidence. Cooke’s (1989) findings report that manufacturing companies disclose more
information than other types of companies. But the findings of Inchausti (1997) and
Owusu-Ansah (1998) provide no evidence of this association. I use industry type as an
explanatory variable in this study, because disclosures differ from one industry type to
another. For this study, companies have also been divided broadly into two categories:
traditional and modern. Traditional companies are food, textile, jute, synthetic, paper,
cement, and sugar. Bangladesh has a long history in these industrial activities which use
old technologies for the most part. Financial institutions tend to place the companies in
the traditional. Modern companies, which tend to place use new technologies include
engineering, pharmaceuticals, chemicals, and metal alloys. The hypotheses drawn for
this variable would be: A particular type of company discloses different amount of
information than that of other types of company.
3.4. Profitability
Previous research (Hossain, 2000; Inchausti, 1997; Karim, 1996; Owusu-Ansah,

1998; Wallace & Naser, 1995; Wallace et al., 1994) use profitability as a determinant
of disclosure in corporate annual reports. However, empirical results from the research
are mixed. Findings of Wallace et al. (1994), Karim (1996), Owusu-Ansah (1998), and
Hossain (2000) suggest that companies having higher profitability disclose more
information than those with lower profitability. Also, the relationship between these
two variables is found to be positive in a study by Wallace and Naser (1995).
Additionally, researchers have used net profit to sales, earnings growth, dividend
growth, return on assets, and return on equity as proxies for profitability. In the present
study, the rate of return on capital employed and sales have been used as a measure of
profitability. It is hypothesized that companies with a higher rate of return (either on
capital employed or sales) disclose information to a greater extent than companies with
a lower rate of return on capital employed. Thus, the hypothesis developed for the
study is as follows:
H1. There is a significant positive association between a number of company characteristics

in respect of size, age, industry type, profitability and the extent of mandatory disclosure.
4. Method
4.1. Selection of sample
This study covers companies listed both on the Dhaka Stock Exchange (DSE) and the
Chittagong Stock Exchange (CSE). The total number of companies listed on either stock
exchange at the end of 1999 was 212. These companies fall into 11 categories: banks,
engineering, food and allied products, pharmaceuticals and chemicals, paper and
printing, fuel, jute, service and real estates, insurance, and miscellaneous. As the study is
limited to only non-financial manufacturing companies, the companies under the
categories of banks, insurance, service and real estates were excluded. The number of
companies was thus reduced to 174. The addresses of these companies were collected
from the DSE and letters were prepared and sent to the 174 companies requesting them
to send a copy of their annual report published in the year 1999. Responses from the
company offices were very poor. Only seven annual reports were available by post. I
then decided to visit the company head offices in order to obtain reports. This yielded
another 87 annual reports of non-financial companies. These 94 (7 + 87) companies
whose annual reports were collected, constitute the sample of the study. Hence, the
actual sample represents about 54% of population of non-financial companies listed on
the stock exchanges.
The comparative distribution of the companies in the population and the sample are
given in Table 1.
Table 1
Distribution of sample by industry type
Industry type Population Sample
Number % Number %
Engineering 22 12.6 19 20.2
Food and allied product 33 19.0 16 17.0
Fuel and power 4 2.3 2 2.1
Jute 7 4.0 0 0.0
Textile 42 24.1 24 25.5
Pharmaceutical and chemicals 25 14.4 16 17.0
Paper and printing 8 4.6 1 1.1
Cement 5 2.9 4 4.3
Miscellaneous 28 16.1 12 12.8
174 100.0 94 100.0
4.2. Construction of the disclosure index
Although there are several ways of communicating company information, such as

interim reporting, press releases, letters, etc., the annual report is still considered the
major medium disclosing information. It has been argued that the information
contained in the report usually differs from company to company. Selection of proper
items of information that are expected to be disclosed in the annual report is not an
easy task. I consulted the mandatory disclosure checklist used in prior studies while
preparing the disclosure index for this study. However, the disclosure index employed
in this study is based mainly on the three regulatory sources in Bangladesh. They are,
as previously stated, the Companies Act 1994, disclosure requirements of the stock
exchanges, and the approved IASs. As each source is separate, I included most of the
requirements of each source in the disclosure index. The disclosure index was
finalized after consultation with the relevant experts. Appendix 1 presents the disclosure
index.
Table 2 shows the distribution of 160 items of information across the annual report:
balance sheet items 41%, income statement 28%, accounting policies 14%, historical
summary 12%, and directors’ report 5%.
4.3. Scoring the disclosure items
There are two methods for determining the level of corporate disclosure: weighted
and unweighted approaches (Cooke, 1989). The weighted approach allows distinctions
to be made for the relative importance of information items to the users (Inchausti,
1997). The advocates of this approach are of the opinion that all items of information
are not equally important and, therefore, allocation of weights is done somewhat
arbitrarily by the researchers. Another approach and the one adopted for present study is
the unweighted approach. This approach is based on the assumption that each item of
disclosure is equally important. Additionally, all disclosure items are equally important
to the average users (Wallace, 1988). Specifically, attention is given to all users of
annual reports rather than particular user groups. Here items of information are
numerically scored on a dichotomous basis. Score one is assigned if a company
discloses an item of information. In the case of non-disclosure the score is zero. An
unweighted index is defined as the ratio of the number of items a company actually
Table 2
Distribution of index items
No. of Items %
Balance sheet items 66 41
Income statement items 44 28
Accounting policies items 23 14
Directors’ report items 08 05
Historical summary items 19 12
160 100
discloses to the total that it could disclose. The total disclosure (TD) score thus arrived
at for a company is additive as follows:
X
n
TD ¼ di
i¼1
Where, d = one if the item d 1 is disclosed; zero, if the item d 1 is not disclosed;
n = number of items.
A major issue for the weighted approach is that if different user groups are asked to
weight the importance of various items, they may give weight the same items of
information differently. The weighted approach has, in fact, encountered several
problems. Prior studies, which have examined both weighted and unweighted
approaches, draw similar conclusions about the methods (Choi, 1973; Inchausti,
1997). The equal weighting system is, therefore, viewed to be superior to the differential
weighting system (Owusu-Ansah, 1998) and for that reason this study uses the
unweighted disclosure index approach to measure the level of corporate mandatory
disclosures. Similar studies in other countries also have used the unweighted disclosure
index approach (Owusu-Ansah, 1998; Wallace & Naser, 1995). But the unweighted
approach should be employed with a caveat. One main problem of this approach is that
a company may be penalized by assigning a score of zero for the absence of an item of
information that is not applicable to it. In order to overcome this problem, the relevance
of each absent item needs to be investigated and then classified as non-disclosure for a
relevant item of reporting and non-applicable otherwise. For companies having non-
applicable items, the use of a relative index is suggested (Owusu-Ansah, 1998). The
relative index approach is the ratio of what a particular company actually disclosed to
what the company is expected to disclose. In spite of the subjective discrimination
between non-disclosure and non-applicable items, this approach is considered to be a
more accurate measure than one that assumes that all companies are identical and,
therefore, no difference need exist in disclosure requirements. This approach has been
employed in several prior studies (see, e.g., Cooke, 1989; Inchausti, 1997; Owusu-
Ansah, 1998; Wallace & Naser, 1995; Wallace et al., 1994).
4.4. Test of hypothesis
In order to test the hypothesis I used both non-parametric and parametric statistics.
Cooke (1989) used these two approaches in his study. A non-parametric analysis was
used for measuring the disclosures of an individual company based on indexes and the
level of disclosure practices. This approach used chi-square, and Lambda. Another
approach used based on the mean of each category of company, is the contingency
coefficient of the correlation. The contingency coefficient of the correlation along with
chi-square is considered useful to measure association. When the expected value of
one or more cells in the table is less than five, however, chi-square is not a
meaningful way to measure association. In that situation, an alternative measure,
Lambda, overcomes the limitation of the expected frequencies (Cooke, 1989, p. 201).
Lambda varies between zero and one, where zero indicates no association and one
indicates that the variables are perfectly associated.The regression technique used to
test H1 is as follows:
TDE ¼ a þ B1 Size þ B2 Age þ B3 Profit þ B4 Industry þ e
Expected sign (+) (+) (+) (+)
Where:
TDE =total disclosure score received from each company

a =the constant, and
e =the error term
5. Results and discussion
5.1. Level of disclosure and disclosure performance by age
The study reveals that disclosure compliance is poor among listed companies. They
disclosed an average of 43.53% of the items selected. The minimum score found in the
study is 17.3% and the maximum is 72.50%, showing a decreasing trend in the level of
corporate disclosure with an increase in the disclosure score. This finding compares
favorably to Hossain and Taylor’s (1998) findings where the mean score is 29.33.
Compliance with accounting standards disclosure by listed companies was better in
another study by Hossain (2000), where the average compliance level is 69.05% with a
minimum and maximum level of 35.85% and 94.34%, respectively. Nevertheless,
conformity with mandatory disclosure by Bangladeshi firms is low compared to firms
in other countries. For example, the average mandatory disclosure for Zimbabwe firms is
74.43% (Owusu-Ansah, 1998).
Whether or not company age influences the level of disclosure is examined by using
lambda analysis (Table 3). For purposes of this analysis, the sample companies are
Table 3
Disclosure of information by age
Disclosure index Age of the company Total
Very old company Old company New company
Up to 20 1 1
21–30 1 3 4 8
31–40 4 14 16 34
41–50 1 8 12 21
51–60 4 10 5 19
61–70 2 7 1 10
71 and above 1 1
Total 12 43 39 94
v2 Significance Contingency coefficient k

12.213 .429 .0339 .000
Table 4
Disclosure of information by status
Disclosure index Status of the company Total
Traditional Modern
Up to 20 1 1
21–30 7 1 8
31–40 17 17 34
41–50 11 10 21
51–60 9 10 19
61–70 2 8 10
71 and above 1 1
Total 46 48 94

10.162 .118 .312 .000
classified as very old, old, and new companies depending on when they first registered
with the Registrar of Companies. The results did not support the hypothesis that old
companies will provide more information than new ones.
5.2. Disclosure performance by status
Disclosure was expected to depend on the status of a company. Modern companies are
likely to disclose more information than that of traditional companies. Table 4 shows that
out of 94 companies, 49% falls in the category of traditional companies and the remainder
51% in the category of modern companies. It can also be seen from the table that 24% of
traditional and 40% of modern companies have a score of more than 51%. Lambda reveals
no association between disclosure and status of the companies.
5.3. Size-wise disclosure
Corporate size can be represented by many different indicators. Karim (1996) uses
annual sales, total assets, and market value of the firm to measure size, whereas Hossain
(2000) uses sales turnover and total assets as size variables. In this study capital employed
and annual sales are used as the measures of company size. The relationship between size
and disclosure is shown in Tables 5 and 6.
Larger companies are expected to disclose more information. As can be seen from
Table 5, at 51–60% the disclosure level of 21% have capital employed of Tk. 100 to 200
million. The same percentage was also found for companies with Tk. 200 to 400 million,
whereas 53% of the companies have capital employed at the Tk. 400 million and above
level. Again, for ten companies at the 61% to 70% disclosure level, 50% have capital
employed of Tk. 200 to 400 million, 20% of Tk.400 to 800 million, and 30% of Tk.1600
million and above.
From Table 6 it can be seen that no company with sales of less than Tk. 100 million
51% to 60% level. Out of the 19 companies at this level, 37% had sales of Tk. 200 to 400
million, and 37% had sales of 400 to 800 million. Three companies had sales of Tk. 800 to
Table 5
Disclosure of information by size
Disclosure Total capital employed Total
index Up to 50 50–100 100–200 200–400 400–800 800–1600 1600 and above
Up to 20 1 1
21–30 3 1 2 1 1 8
31–40 7 7 6 9 3 1 1 34
41–50 1 1 8 3 8 21
51–60 1 4 4 7 3 19
61–70 5 2 3 10
71 and above 1 1
Total 12 9 19 23 21 5 5 94

64.631 .002 .638 .183
1600 million and one company had sales of Tk. 1600 million and above. At the disclosure
levels of 61% and above there are no smaller companies.
This analysis indicates that the size of the company in regard to capital employed and
sales does have a little impact on the disclosure of information. Lambda, too, reveals the
same conclusion. However, the influence of size was found to be significant in the studies
of both Karim (1996), and Hossain (submitted for publication).
5.4. Profitability and disclosure
The profitability variable is used by many researchers (Hossain, 2000; Inchausti, 1997;
Karim, 1996; Owusu-Ansah, 1998; Wallace & Naser, 1995; Wallace et al., 1994), although
the measures of profitability were not similar in all these studies. These studies used net
profit to sales, rate of return on assets, earnings growth, and dividend stability. The two
profitability measures used in this study are net profit on capital employed and net profit
Table 6
Disclosure of information by size
Disclosure Annual sales Total
index Up to 50 50–100 100–200 200–400 400–800 800–1600 1600 and above
Up to 20 1 1
21–30 4 1 3 8
31–40 12 2 9 9 2 34
41–50 2 4 3 4 6 2 21
51–60 1 7 7 3 1 19
61–70 4 2 1 3 10
71 and above 1 1
Total 19 7 13 24 20 7 4 94

79.592 .000 .677 .217
Table 7
Profitability and the level of disclosure
Disclosure Net profit on capital employed Total
index Loss Up to 2 2–4 4–8 8–16 16–32 32 and above
Up to 20 1 1
21–30 8 8
31–40 11 9 4 7 3 34
41–50 3 3 3 4 7 1 21
51–60 1 1 4 7 5 1 19
61–70 2 6 1 1 10
71 and above 1 1 1
Total 23 14 8 17 23 7 2 94

77.950 .000 .673 .167
on sales. The relation between net profit on capital employed and the disclosure index is
presented in Table 7.
About 25% of the companies under study suffered losses, whereas 32% enjoyed profits
between 8% and 32% on capital employed. At these profit levels, 20% of the companies
fall at the 60% and below disclosure level, and 12% face at the disclosure level of 61% and
above. Thus, analysis indicates a very low degree of association between net profit on
capital employed and corporate disclosure.
An examination of the association between net profits on sales and the disclosure level
also reveals that association was not significant enough to reject the null hypothesis (Table 8).
Lambda accepts a low level of association between disclosure and profitability in terms of
both net profits on capital employed and net profits on sales. Both Karim (1996) and Hossain
(2000) found a positive association between profitability and disclosure. The finding of the
present study is not incongruent with them; it shows a low level of association between
profitability and disclosure. According to Zubaidah and Koh (1999), a more profitable
company could have disclosed more information in order to improve its image. The standard
Table 8
Profitability and the level of disclosure
Disclosure Net profit on sales Net profit Total
index Loss Up to 2 2–4 4–8 8–16 16–32 32 and above
Up to 20 1 1
21–30 8 8
31–40 11 8 4 5 4 1 1 34
41–50 3 3 5 5 1 4 21
51–60 2 2 7 7 1 19
61–70 2 6 2 10
71 and above 1 1
Total 23 14 11 19 18 8 1 94

75.337 .000 .667 .150
Table 9
Descriptive statistics
Mean Std. deviation N
Disclosure index 3.88 1.23 94
Age of the company 2.29 .68 94
Status of the company 1.51 .50 94
Total capital employed 3.71 1.61 94
Size of annual sales 3.60 1.74 94
Net profit on capital employed 3.34 1.79 94
deviation of each group is approximately equal suggesting that the equal variance
assumption is met (see Table 9, descriptive statistics).
The degree of variability in the case of age and status of the company is much lower
compared to other variables in the study. Thus we can reject the null hypotheses that there
is no association between disclosure and size and between disclosure and profitability.
5.5. Multivariate test
Regression analyses were run using ordinary least squares (OLS) estimates and are
reported in Table 10. Estimates of regressions are substantially better than that of
univariate analysis. Regression has been used in much previous research (e.g., Cooke,
1989; Owusu-Ansah, 1998; Wallace & Naser, 1995; Wallace et al., 1994). The results of
the estimation procedure report that company size, profitability, and the intercept have a
statistically significant effect on the extent of mandatory disclosure, but at different levels.
Table 10
Regression results
Coefficient of multiple regression .759
Coefficient of determination (R 2) .577
Adjusted R 2 .547
Standard error .830
Analysis of variance
Sum of squares df Mean square F
Regression 81.711 6 13.619 19.746
Residual 60.002 87 .690 –
Variables in the equation

Unstandardized coefficients Standardized coefficients t Sig.
b Std. error b
(Constant) 1.789 .537 3.328 .001
Age of the company .195 .136 .108 1.431 .156
Status of the company .298 .184 .121 1.614 .110
Total capital employed 3.603 4 .100 .005 .036 .971
Size of annual sales .307 .108 .432 2.833 .006
Net profit on capital employed .170 .120 .246 1.420 .059
Net profit on sales .134 .107 .189 1.254 .213
The intercept is significant at the .001 level. Company age is significant at the .15 level,
whereas profitability is significant at .05 level.
The disclosure score, a continuous variable, is used as the dependent variable. The
disclosure score for each company is related to company characteristics, the independent
variables for the study, such as age, status, size and profitability. The four company
attributes were measured on a continuous scale. The explanatory power of the OLS model,
as indicated by the adjusted R 2, is 54.7% ( p b .001). The R 2 is .577, which reveals that the
model is capable of explaining a 57.7% variability in disclosing information in the annual
reports of the selected companies. The F statistic indicates that the model employed to
explain the variations in mandatory disclosure in company annual reports is significant at
the conventional levels ( p b .01).
The results show that some variables are significant in explaining disclosures. Companies
that are larger in size measured by annual sales ( p b .01) are likely to disclose more
information. The positive association between company size and mandatory disclosure is
consistent with prior findings (see, e.gAhmed & Nicholls, 1994; Cooke, 1989; Meek et al.,
1995; Owusu-Ansah, 1998; Wallace & Naser, 1995). Lang and Lundholm (1993) also report
that disclosure is higher for larger firms. It is argued that larger firms provide more
information because they are likely to face lower cost of disclosure (Ho & Wong, 2001).
Furthermore, since larger firms tend to disclose more to meet the increased demand in
reducing uncertainty about quality and expected return, they arguably face lower
competitive cost of disclosure (Ferguson, Lam, & Lee, 2002).
The hypothesis that companies having higher profitability disclose more information
than companies with lower profitability is supported ( p b .05). Lang and Lundholm (1993)
suggest that well-performing firms provide more information in the annual report than do the
poor-performing firms. The positive effect of profitability on financial disclosure is con-
sistent with Wallace et al. (1994), Karim (1996), Owusu-Ansah (1998), and Hossain (2000).
The managers of profitable firms are motivated to disclose more information to appease
shareholders, to enhance company image leading to marketability of shares, and above all to
justify their compensation (see Meek et al., 1995; Zubaidah & Koh, 1999).
The t-statistic of industry type is insignificant, indicating that it has a negligible effect
on the mandatory disclosure practices of the sample companies. It is consistent with results
of Owusu-Ansah (1998), where firms are classified into four broad heads, namely, mining,
conglomerate, manufacturing, and others. Inchausti’s (1997) findings also do not support
an association between industry type and level of disclosure.
Similarly, company age was not found to be as significant a predictor of compliance
with mandatory disclosure as expected. An older company was expected to disclose more
mandatory information than a younger one. For this study company age is measured from
the date of registration with the Registrar of Companies not from the listing date. A listed
company has to comply with disclosure and reporting regulations and may require some
time to adapt to the new disclosure environment. Public companies having pre-listing
experience may, therefore, have no link to a specific level of disclosure. This needs further
investigation. Owusu-Ansah (1998) finds a positive association between company age and
mandatory disclosure. He defines company age as the experience gained by public
companies during the listing periods. Thus, the possible explanation for his findings is
that company age in terms of listing status is related to mandatory disclosure.
6. Conclusions, limitations, and suggestions for future research
The aim of this study is to examine the level of mandatory disclosure made by listed
companies in Bangladesh. It also investigates the factors that influence mandatory disclosure
practice. The findings would be used to improve the quality of corporate disclosure by
Bangladeshi companies. The study finds that many corporate annual reports do not meet the
disclosure requirements of the regulatory bodies in Bangladesh. On average, the sample
companies disclose information on only 43.53% of the items asked for indicating poor
compliance with the mandatory rules. This result is better than the findings of Hossain and
Taylor (1998), where the mean score is 29.33%. A later study, Hossain (2000), is more
encouraging, with average compliance rates for accounting standards disclosure reported at
69.05% with a range of 35.85% to 94.34%. These results indicate that listed companies in
Bangladesh place more emphasis on IASs disclosures. This may be the result of the ICAB’s
efforts to persuade its members who work as either professional accountants or auditors to
comply on the results of the ICAB’s monitoring. Nevertheless, the available literature
reveals that overall compliance with mandatory disclosure by Bangladeshi firms is low
compared to firms from other countries. For example, the average mandatory disclosure for
Zimbabwe firms is 74.43% (Owusu-Ansah, 1998). The lack-lustre disclosure performance
by Bangladeshi firms can be attributed to organizational culture, poor monitoring, and lapse
in enforcement by the regulatory body. Disclosure decisions are culture-driven (El-Gazzar,
Philip, Finn, & Jacob, 1999). Ho and Wong (2001) argue that in countries where the culture
supports a high level of secrecy, managements become less transparent and are less likely to
favor a high level of disclosure. Further analysis is required to impound cultural factors. With
regard to regulations, Karim et al. (1998) suggest that at present they are ineffective when it
comes to monitoring disclosure practices in Bangladesh. Again, regulations alone,
according to Ho and Wong (2001), can do little to ensure disclosure because companies
view that disclosure excellence lies in the hands of regulatory bodies who work for
safeguarding the company’s value for shareholders. What the regulatory bodies need to do is
to create an environment that helps become aware of the companies consequences of non-
disclosure of adequate information in the annual reports.
This study examines the relationship between mandatory disclosure and four corporate
attributes; i.e., company age, status, size, and profitability. The four company attributes
were measured on a continuous scale. Analysis reveals that the age of the company is not a
factor for disclosure. The investigation did not support the hypothesis that old companies
will provide more information than new companies. Similarily, company status has no
effect on disclosure. Contrary to prior findings (Cooke, 1989; Meek et al., 1995; Owusu-
Ansah, 1998), this study finds little support for the relationship between size and the level
of disclosure, however, except in respect to sales, where size is marginally significant. The
same result is found in the case of disclosure and profitability.
Based upon the findings of this study, the following observations and recommendations
have been outlined which may be useful to company managers, financial analysts,
investors, and policy makers for the capital market development of the country:
! Companies disclose more information on the cost of sales, providing details of

expenses, but there is less compliance with disclosure regulations. Steps should
be taken to ensure that mandatory information items are covered in the annual
report.
! The Securities Exchange Commission has already introduced a reward–punishment
program to ensure that listed companies disclose adequate information in their annual
reports. The enforcement program, however, has not been effective. A committee could
be formed representing investors, financial institutions, and academicians to appraise
the published accounts and give their observations.
! The Companies Act 1994 does not include a provision for publication of either a
Statement of Sources and Application of Funds or a Statement of Cash Flow. The IAS-
7, however, adopted a cash flow statement for use in Bangladesh. This standard allows
a cash flow statement to be prepared in two ways, viz. the direct or indirect method.
The Companies Act should also include a provision about the preparation of cash flow
statements.
The Bangladeshi capital market is not efficient and well structured. An increase in the
flow of free and accurate disclosure would help the capital market develop. Government
needs to come forward to protect the interests of the different user groups.
! The responsibility of the auditor is to check whether the accounts are prepared in
accordance with accounting policies and requirements of the Companies Act 1994. He
or she has to state his or her opinion that the audited accounts give a true and fair view
of the state of affairs of the company. Audit reports should also state whether or not
disclosure rules are properly complied with.
! With a view to improving disclosure level, an Accounting Board should be set up by
the Government with members from both from the Institute of Chartered Accountants
of Bangladesh and the Institute of Cost and Management Accountants of Bangladesh.
In addition to the adoption of accounting standards and the development of accounting
in Bangladesh, the board should have the responsibility of determining the degree of
compliance with the disclosure regulations.
! An accounting court could be created to deal with litigations regarding the
disclosure of information. An individual who has a direct interest in the annual
reports of a company could bring a charge of non-compliance with the disclosure
requirements.
! The present study is limited to only 54% of the companies listed on the stock
exchanges. Future research could investigate disclosure performance of all the listed
companies. Research could also explore the variations in disclosure between listed and
unlisted companies. Examining similar research issues within different industry sectors
would also be an interesting extension of this study. This might reveal interesting
results in terms of variations within the industrial sectors.
! Any opinion survey of users of company annual reports could be conducted. Such a
survey would provide additional insights on corporate disclosure practices in
Bangladesh.
! Finally, this study covers the annual reports for a single year only. Additional research
is needed to assess the trends of disclosure and to know whether the quality of
disclosure has improved over time.
Appendix A. Disclosure index
Historical summary
1. A brief description of the nature and principal activities of the company and its subsidiaries
2. The country of incorporation and the address of the registered office
3. Names of the top employees, lines of authority and their remuneration
4. List of directors
5. Outside affiliations of the directors
6. Audited financial statements (balance sheet and profit and loss account)
7. Audit report
8. Report of the chairman or CEO
9. Statement of cash flows
10. Holdings in associates and subsidiaries with the relative percentage
11. Statement of changes in the share capital
12. Number and types of shareholders
13. Names and size of holdings of largest shareholders
14. Significant changes in the company’s or its subsidiaries’ fixed assets and the market value of land,
if the value differs substantially from the book value
15. The date when the financial statements were authorized for issue and who gave that authorization
16. Post-balance-sheet events
17. Discussion of major factors which will influence next year’s results
18. Forecast of company performance
19. Comparative balance sheet for two years
Balance Sheet Items

20. The total carrying amount of inventories
21. Inventories are sub-classified as merchandise, production supplies, materials, work in progress,
and finished goods
22. Inventories carried at net-realizable value
23. Amount of inventories pledged as security for liabilities
24. Cash and cash equivalents
25. The components of cash and cash equivalents should be disclosed and a reconciliation of the amounts in
the cash flow statement with the equivalent items reported in the balance sheet should be presented
26. Trade and other receivables
27. Receivables are analyzed by amount from trade customers, from other members of the group,
and from related parties
28. Advances and loans to staff or directors
29. Advances and loans to partnership firms in which the company or any of its subsidiaries is a partner
30. Advances recoverable in cash or in kind or for value to be received, e.g., rates, taxes, and insurances, etc.
31. Interest accrued on investment
32. Provision for provident fund scheme
33. Secured short-term borrowings
34. Unsecured short-term borrowings
35. Unpaid dividends
36. Provision for doubtful debts
37. Trade and other payables
38. A brief description of the nature of the contingent assets/liabilities
39. Provision for taxation
40. Provision for proposed dividends
41. Provision for gratuity
42. Provision for contingencies
43. Provision for insurance, pension, and similar staff-benefit schemes
(continued on next page)
Appendix A (continued)
44. Provision for liabilities
45. Deferred tax liabilities
46. Classification of assets and liabilities
47. Aggregate value of intangible assets
48. Breakup of intangible assets
49. Aggregate amount of investments
50. Investment in subsidiary companies
51. Investment in associated companies
52. Investment in quoted and unquoted shares other than group
53 Investment in government securities
54 Value of land and buildings
55. Amount of the leasehold property
56. Reconciliation between the total of minimum lease payments at the balance sheet date and their present
value
57. Cost of furniture and fittings
58. Expenditure upon development of property
59. Patents, trade marks, and designs
60. A company with subsidiaries should annex a set of consolidated financial statements to its own
financial statements
61. Minority interests in the consolidated financial statements to be shown separately
62. Total carrying amount of property, plant, and equipment
63. The measurement bases used for determining the gross carrying amount of property, plant, and equipment.
When more than one basis has been used, the gross carrying amount for that basis in each category
should be disclosed
64. A reconciliation of the carrying amount of property, plant, and equipment at the beginning and end of the
period showing additions/disposals/acquisitions/impairment losses
65. The existence and amounts of restrictions on title, property, plant, and equipment pledged as security for
liabilities
66. Accumulated impairment losses at the beginning and end of the period
67. The amount of commitments for the acquisition of property, plant and equipment
68. In case of revaluation of property, plant, and equipment it should include: the firm’s policy on
revaluation; the basis used to revalue the assets; and the effective date of revaluations
69. Research and development costs recognized as an asset
70. The amount of goodwill/negative goodwill arising on the acquisition
71. The gross amount of depreciable assets and the related accumulated depreciation
72. Non-current interest-bearing liabilities
73. Loans from directors
74. Long-term liabilities are disclosed separately showing the nature of the recipients such as secured
loans, unsecured loans, inter-company loans, and loans from associated companies
75. The amount of borrowing costs capitalized during the period
76. The capitalized rate used to determine the amount of borrowing costs eligible for capitalization
77. Share capital: authorized, issued, subscribed, called up and paid up
78. Number of shares hold by directors
79. A reconciliation of the number of shares outstanding at the beginning and at the end of the year
80. Par value per share, or that the share have no par value
81. The rights, preferences, and restrictions for each class of share including restrictions on the distribution of
dividends and the repayment of capital
82. Shares in the enterprise held by the enterprise itself or by subsidiaries or associates of the enterprise
83. If any shares or debentures have been issued, the number, class, and consideration received and the reason
for the issue
84. Particulars of any option or unissued share capital
85. A description of the nature and purpose of each reserve
Income Statement
86. Sales/revenue, aggregate amount
87. Amount of revenue in each significant category of revenue
88. The cost of inventories sold during the period.
89. Finance costs
90. Share of results of jointly controlled entity and associates
91. Profit or loss from ordinary activities
92. Any exceptional or unusual credits or charges
93. Profit or loss arising from sale or disposal of fixed assets
94. Break up of income from investments
95. Directors’ remuneration
96. Auditors’ remuneration for services as auditors
97. Amount paid to or receivable by third parties in respect of services rendered by any past or present
directors to the company or its subsidiaries
98. Recognition and depreciation/amortization of tangible assets
99. Recognition and depreciation/amortization of intangible assets
100. The amount adjusted to net profit or loss due to change in accounting policy
101. The amount of the correction recognized in net profit or loss for the current period
102. The effect of the acquisition/disposal of subsidiaries on the financial position
103. The net profit or loss for the periods
104. The tax expense (income) related to profit or loss from ordinary activities should be presented on the
face of the income statement
105. The major components of tax expense (income) should be disclosed separately
106. Tax expense relating to extraordinary items
107. Brokerage and discount on sales other than the usual trade discounts
108. The amount set aside to any reserve but not including provisions made to meet any specific liability,
contingency, or commitment
109. Amount set aside or provisions made for meeting specific liability, contingency, or commitment
110. Workmen and staff welfare expenses
111. Separate disclosure of staff remuneration not less than Tk. 36,000
112. Commission or other remuneration payable separately to a managing agent or his associate
113. Research and development costs recognized as an expense
114. Disclosure of pension costs
115. Payment for gratuity
116. Information regarding the licensed capacity, installed capacity, and actual production
117. Expenditure in foreign currency on account for royalty, know-how professional consultation fees,
interest, and other matters
118. Value of percentage of all imported and local raw materials, spare parts, and components consumed
119. Amount remitted in foreign currencies on account of dividends to non-resident shareholders, the number
of shares held by them, and the year for which the dividend is being paid
120. Foreign exchange earnings for export of goods (FOB price, royalty, know-how professionals and
consultation fees, interest and dividends, other income and its nature
121. Advertisement expenditure
122. Social security costs
123. Pension costs contribution plan
124. Contributions in excess of Tk. 50,000 made to government approved charities or other charities
125. Basic earnings per share
126. Diluted earnings per share
127. The amounts used as the numerators in calculating basic and diluted earnings per share, and a
reconciliation of those amounts to the net profit or loss for the period
128. The weighted average number of ordinary shares used as the denominator in calculating basic and
diluted earnings per share, and a reconciliation of these denominators to each other
129. Comparative profit and loss accounts for two years
(continued on next page)
Appendix A (continued)
Accounting Policies
130. The measurement basis used in preparing the financial statements
131. The reason and nature of a change in an accounting policy
132. Statement of compliance with approved IASs
133. Basis of consolidation
134. The accounting policies adopted in measuring inventories, including the cost formula used.
135. The accounting policies adopted for the recognition of revenues
136. The accounting policies adopted for research and development costs
137. The amortization methods used and the useful lives or amortization rates used for research and
development costs
138. Disclose firm policy for foreign currency risk management
139. The depreciation methods used
140. The useful lives or the depreciation rates used
141. Method of valuing goodwill
142. The methods used to account for investments in associates
143. Accounting policy for borrowing costs
144. Accounting policy for actuarial gains and losses
145. Treatment of retirement benefits
146. Treatment of preliminary expenses
147. Methods of advance payments
148. Purchase policy
149. Sales policy
150. Deferred taxation system
151. Conversion or translation of foreign currencies
152. Treatment of contingent liabilities
Director’s Report
153. The state of the company’s affairs
154. Amount proposed to carry to any reserve
155. Recommended dividend
156. Material changes and commitment affecting the financial position of the company that occurred between
the year and the date of report
157. Changes in the nature of the company’s business during the year
158. Changes in the company’s subsidiaries or in the nature of their business
159. Changes in the classes of business in which the company has an interest
160. Explanation and information of every reservation, qualification, or adverse remark in the auditor’s report
References
Ahmed, M. U., & Kabir, M. H. (1995). External financial reporting as envisaged in Companies Act 1994: A
critical evaluation. Journal of Business Studies, Dhaka University, 16(1), 1985.
Ahmed, K., & Nicholls, D. (1994). The impact of non-financial company characteristics on mandatory
compliance in developing countries: The case of Bangladesh. The International Journal of Accounting, 29(1),
60 – 77.
Alam, A. K. S. (1989, March–April). The Securities and Exchange Rules, 1987: Impact thereof on corporate
financial reporting in Bangladesh. The Cost and Management, 32 – 35.
Benjamin, J. J., & Stanga, K. G. (1977). Differences in disclosure needs of major users of financial statements.
Accounting and Business Research, 187 – 192.
Brownlee, E. R., et al. (1990). Corporate financial reporting: Text and cases (pp. 217 – 219). Boston7 Irin Inc.
Carol, A., Frost, & Pownall, G. (1994). Accounting disclosure practices in the United States and the United
Kingdom. Journal of Accounting Research, 32(1), 75 – 89.
Choi, F. D. S. (1973). Financial disclosure and entry to European Markets. Journal of Accounting Research, 11,
159 – 179.
Cooke, T. E. (1989). Disclosure in the corporate annual reports of Swedish companies. Accounting and Business
Research, 19(74), 113 – 124.
Eccles, R. G., & Mavrinac, S. C. (1995). Improving the corporate disclosure process. Management Review, 11 – 24.
El-Gazzar, S., Philip, M., Finn, M., & Jacob, R. (1999). An empirical investigation of multinational firmsT com-
pliance with international accounting standards. The International Journal of Accounting, 34(2), 239 – 248.
Ferguson, M. J., Kevin Lam, C. K., & Lee, G. M. (2002). Voluntary disclosure by state-owned enterprises listed
on the stock exchange of Hong Kong. Journal of International Financial Management and Accounting, l3(2),
125 – 152.
Forker, J. J. (1992). Corporate governance and disclosure quality. Accounting and Business Research, 22(86),
111 – 124.
Government of Bangladesh (1984). The Income Tax Ordinance 1984. Dhaka, Government of the Peoples
Republic of Bangladesh7 The Bangladesh Gazette.
Government of Bangladesh (1987). The Securities and Exchange Rules 1987. Dhaka, Government of the Peoples
Government of Bangladesh (1991). The Banking Companies Act 1991. Dhaka, Government of the Peoples
Government of Bangladesh (1993). Securities and Exchange Commission Act 1993. Dhaka, Government of the
Peoples Republic of Bangladesh7 The Bangladesh Gazette.
Government of Bangladesh (1994). The Companies Act 1994. Government of the Peoples’ Republic of
Bangladesh7 The Bangladesh Gazette.
Gray, S. J., & Vint, H. M. (1995). The impact of culture on accounting disclosures: Some international evidence.
Asia Pacific Journal of Accounting, 33 – 43.
Ho, S. S. M., & Wong, K. S. (2001). A study of corporate disclosure practices and effectiveness in Hong Kong.
Journal of International Financial Management and Accounting, 12(1), 75 – 101.
Hossain, M.A. (2000) An evaluation of the international accounting standards in developing countries: A case
study of Bangladesh, An Unpublished Research Report, Faculty of Business Studies, Rajshahi University.
Hossain, M.A., & Taylor, P.J. (1998). Extent of disclosure in corporate annual reports in developing countries: A
comparative study of India, Pakistan and Bangladesh, A paper presented to the Cardiff School Business
School Conference in Financial Reporting (held in 6–7 July).
Inchausti, B. (1997). The influence of company characteristics and accounting regulation on information
disclosed by Spanish firms. European Accounting Review, 6(1), 45 – 68.
Ingram, R. W., & Frazier, K. B. (1980). Environmental performance and corporate disclosure. Journal of
Accounting Research, 614 – 621.
International Accounting Standard Committee (2001). International Accounting Standard-2001. London7 IASC.
Karim, A.K.M.W. (1996). The association between corporate attributes and the extent of corporate disclosure.
Journal of Business Studies, University of Dhaka, 17(2), 89 – 124.
Karim, A.K.M.W., et al. (1998). Financial reporting in Bangladesh: The regulatory framework. Journal of
Business Administration, 24(1 and 2), 57 – 88.
Lang, M., & Lundholm, R. (1993). Cross-sectional determinants of analyst ratings of corporate disclosures.
Journal of Accounting Research, 31(2), 246 – 271.
Lobo, G.J., & Zhou, J. (2001). Disclosure quality and earnings management, Paper presented at the 2001 Asia–
Pacific Journal of Accounting and Economics Symposium in Hong Kong.
Marston, C. L., & Shrives, P. J. (1991). The use of disclosure indices in accounting research: A review article.
British Accounting Review, 23, 195 – 210.
Meek, G., Roberts, C. B., & Gray, S. J. (1995). Factors influencing voluntary annual report disclosures by U.S.,
U.K. and continental European multinational corporations. Journal of International Business Studies (Third
Quarter), 555 – 572.
Owusu-Ansah, S. (1998). The impact of corporate attributes on the extent of mandatory disclosure and reporting
by the listing companies in Zimbabwe. International Journal of Accounting, 33(5), 605 – 631.
Singhvi, S. S., & Desai, H. B. (1971). An empirical analysis of the quality of corporate financial disclosure. The
Accounting Review, 129 – 138.
Wallace, R. S. O. (1988). Corporate financial reporting in Nigeria. Accounting and Business Research, 18(72),
352 – 362.
Wallace, R. S. O., & Naser, K. (1995). Firm-specific determinants of the comprehensiveness of mandatory
disclosure in the corporate annual reports of firms listed on the stock exchange of Hong Kong. Journal of
Accounting and Public Policy, 14(2), 311 – 368.
Wallace, R. S. O., Naser, K., & Mora, A. (1994). The relationship between the comprehensiveness of mandatory
disclosure in the corporate annual reports and firm characteristics in Spain. Accounting and Business
Research, 25(97), 41 – 53.
Zubaidah, G., Koh, B.E. (1999). Corporate social responsibility disclosure in Singapore, Paper presented in the
Third International Conference on Management and International Accounting Issues held in Bangalore,
March 25-28.

Akhtaruddin 2005 Research

Enviado por

Dados do documento

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Akhtaruddin 2005 Research

Enviado por

Direitos autorais:

Formatos disponíveis

The International Journal of Accounting

40 (2005) 399 – 422

Corporate mandatory disclosure practices

E-mail addresses: akhtar@usm.my, akhtar249@yahoo.com.

0020-7063/$30.00 D 2005 University of Illinois. All rights reserved.

2. The legal framework for disclosure

Corporate reports generally include information in conformity with reporting and

3. Literature review and hypothesis development

3.3. Industry type

Previous research (Hossain, 2000; Inchausti, 1997; Karim, 1996; Owusu-Ansah,

H1. There is a significant positive association between a number of company characteristics

4.1. Selection of sample

4.2. Construction of the disclosure index

Although there are several ways of communicating company information, such as

4.3. Scoring the disclosure items

4.4. Test of hypothesis

TDE =total disclosure score received from each company

5. Results and discussion

5.1. Level of disclosure and disclosure performance by age

v2 Significance Contingency coefficient k

v2 Significance Contingency coefficient k

5.2. Disclosure performance by status

5.3. Size-wise disclosure

v2 Significance Contingency coefficient k

5.4. Profitability and disclosure

v2 Significance Contingency coefficient k

v2 Significance Contingency coefficient k

v2 Significance Contingency coefficient k

5.5. Multivariate test

Variables in the equation

6. Conclusions, limitations, and suggestions for future research

! Companies disclose more information on the cost of sales, providing details of

Appendix A. Disclosure index

Balance Sheet Items

Você também pode gostar