Ownership Concentration and Corporate Disclosure Choice in Bangladesh

40 Pages Posted: 24 Jun 2015

Date Written: May 31, 2015

Abstract

This paper investigates empirically the effect of ownership concentration on corporate disclosure choice in Bangladesh. In an environment of weak enforceability of laws, corporate culture in Bangladesh is characterized by family control and concentrated ownership. Controlling shareholders exercise nearly full control over a firm’s operating and financial policies, including disclosure policies, while maintaining low cash flow rights relative to voting rights. The paper shows that management’s choice of disclosure across key financial elements is discriminatory against external shareholders and bondholders. The findings show that controlling for factors such as age, size, profitability and financial leverage, ownership concentration reduces corporate disclosure. The findings validate the hypothesis of La Porta et al. (1999) that an increasing ownership concentration leads corporate management to adopt a disclosure regime which is biased against external shareholders and creditors.

Keywords: Family control, ownership concentration, disclosure regulation, corporate governance, transparency and accountability

JEL Classification: G14, G18, M41, M42, M48

Suggested Citation

Rahman, Mizanur, Ownership Concentration and Corporate Disclosure Choice in Bangladesh (May 31, 2015). Available at SSRN: https://ssrn.com/abstract=2622283 or http://dx.doi.org/10.2139/ssrn.2622283

Mizanur Rahman (Contact Author)

University of Dhaka ( email )

Department of Accounting & Information Systems
University of Dhaka
Dhaka, 1000
Bangladesh
+88 01817684202 (Phone)
+88 2 8615583 (Fax)

HOME PAGE: http://www.acmd.com.bd

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