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

Author

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  • Md. Mamunur Rashid

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 Langet 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 Beestet 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.

Suggested Citation

  • Md. Mamunur Rashid, 2020. "Financial reporting quality and share price movement-evidence from listed companies in Bangladesh," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 18(3), pages 425-458, May.
    • Handle: RePEc:eme:jfrapp:jfra-01-2019-0019
    DOI: 10.1108/JFRA-01-2019-0019
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    Citations

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    Cited by:

    1. Ibtihal A. Abed & Nazimah Hussin & Hossam Haddad & Nidal Mahmoud Al-Ramahi & Mostafa A. Ali, 2022. "The Moderating Impact of the Audit Committee on Creative Accounting Determination and Financial Reporting Quality in Iraqi Commercial Banks," Risks, MDPI, vol. 10(4), pages 1-22, April.
    2. Ibtihal A. Abed & Nazimah Hussin & Mostafa A. Ali & Hossam Haddad & Maha Shehadeh & Elina F. Hasan, 2022. "Creative Accounting Determinants and Financial Reporting Quality: Systematic Literature Review," Risks, MDPI, vol. 10(4), pages 1-25, April.
    3. Marius Cîmpan & Cătălin-Paul Păcuraru-Ionescu & Sorin Nicolae Borlea, 2023. "The value of public audit - theories and empirical evidence," Journal of Financial Studies, Institute of Financial Studies, vol. 8(14), pages 24-36, May.

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