Company-Specific Characteristics and Market-Driven Fixed Asset Revaluation in An Emerging Asian Economy

Management & Accounting Review 19, no. 3 (2020): 153–186

12 Pages Posted: 18 Mar 2021

See all articles by Md. Tahidur Rahman

Md. Tahidur Rahman

Bangladesh Army International University of Science and Technology (BAIUST) - Department of Business Administration

Syed Zabid Hossain

University of Rajshahi - Department of Accounting and Information Systems

Abstract

This study aims to explore the company-specific and market factors driving fixed asset revaluation (FAR) in an emerging economy. Our research is based on a sample of 142 companies listed on the Dhaka Stock Exchange (DSE) – the main bourse of Bangladesh. The binary logistic regression model was the main instrument used to measure the significance level of variables and test the hypotheses. The study found that market conditions, profitability, nationality, debt-to-asset ratio, fixed assets intensity, and company size could influence FAR decisions significantly. But, the company age and current ratio have failed FAR decisions insignificantly. Since there are suspicions about the creative practice of FAR, users need to be cautious when explaining and utilizing the information communicated via financial statements of companies that revalued their assets. Besides, regulators should strictly enforce the laws to avoid selective disclosures, and companies should fully disclose market-sensitive information so that corporate stakeholders promptly receive FAR-related disclosures. This paper could serve a large assortment of stakeholders interested in knowing the drivers behind and effects of FAR. Inclusion and the explanation of three new factors, corporate nationality, age, and market condition, could be an extension of the existing FAR literature.

Keywords: Fixed asset revaluation, Fair value, IAS 16, Stock market crash, PP&E

JEL Classification: M41, G41

Suggested Citation

Rahman, Md. Tahidur and Hossain, Syed Zabid, Company-Specific Characteristics and Market-Driven Fixed Asset Revaluation in An Emerging Asian Economy. Management & Accounting Review 19, no. 3 (2020): 153–186 , Available at SSRN: https://ssrn.com/abstract=3778448

Md. Tahidur Rahman (Contact Author)

Bangladesh Army International University of Science and Technology (BAIUST) - Department of Business Administration ( email )

Comilla Cantonment
Comilla, 3500
Bangladesh

Syed Zabid Hossain

University of Rajshahi - Department of Accounting and Information Systems ( email )

Zimbabwe
+8801718577481 (Phone)

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