Non-Financial Disclosure and Market-Based Firm Performance: The Initiation of Financial Inclusion
Journal of Contemporary Accounting & Economics, 13(3): 263-281
50 Pages Posted: 14 Aug 2017 Last revised: 4 Jan 2021
Date Written: August 11, 2017
We examine the association between financial inclusion disclosure and firm performance in Bangladeshi banks from 2009 to 2014 in response to a regulatory directive on the engagement of banking firms in financial inclusion activities. We find a positive association between financial inclusion disclosure and banking firms’ subsequent performance, with this relationship moderated by market competition and government ownership. We also find evidence that firms’ engagement in financial inclusion activities increases their market share, with the disclosure of this information reducing the information asymmetry between managers and capital market participants. The broad implication of our research findings is that firms considering investing in financial inclusion activities could benefit from improved firm performance and gain market share. The research findings contribute to the larger debate on the reasons why firms should consider incorporating these initiatives into their operational activities. In addition, the findings inform various international organisations that promote financial inclusion activities.
Keywords: Financial inclusion disclosure, Banking industry, Firm performance, Emerging economy, Stakeholder theory
JEL Classification: G21, M14, M41, M48
Suggested Citation: Suggested Citation