Importance of Several Components of Annual Report to the Investors: A Study on the Northern Part of Bangladesh

Brazendra Nath Roy; Purbasha Dash

doi:10.46336/ijbesd.v4i4.532

Importance of Several Components of Annual Report to the Investors: A Study on the Northern Part of Bangladesh

Brazendra Nath Roy, Purbasha Dash

Abstract

This study examines the perceived usefulness of several components of the annual reports in the decision-making process of investors in making investment decisions. Corporations provided their financial information i.e financial result, financial conditions, and distributions to shareholders etc. to the users through corporate annual report. The main objective of the study is to measure the level importance of the several parts of annual report in providing useful information to the investors. A well-organized questionnaire was used to collect data from the respondents. Descriptive statistics, reliability tests, correlation, regression, etc., were applied to detect the result of the study. The development of the survey indicates that the annual report provides the required information to the investors for their rational investment decision, but some components of the annual report are not helpful at all to the investors. Balance Sheet, Statement of Cash Flow, Notes to the Financial Statements, Auditors Report, Five Years Financial Highlights, and Income statement were providing more valuable information regarding investment. The findings of the study will encourage preparers to provide reliable information as well as encourage users in using yearly report of corporations.

Keywords

Bangladesh, Annual report, decision making, importance, investor

Full Text:

PDF

References

Adeyemo,,K.A., Isiavwe, D., Adetiloye, K.A. and Eriabie, S. (2017); “Financial reports and shareholders’ decision making in Nigeria: Any connectedness?” Journal of Internet Banking and Commerce, 22(8), 1-14.

Alattar, J. M., & Al‐Khater, K. (2008), "An empirical investigation of users' views on corporate annual reports in Qatar," International Journal of Commerce and Management, vol. 17, no. 4, pp. 312-325.

Al-Razeen, A., and Y. Karbhari. 2007; “An empirical investigation into the importance, use and technicality of Saudi annual corporate information.” Advances in International Accounting 20: 55 – 74.

Anwar, F., Anwar, S., & Mannan, A. (2012), "The Relevance of Annual Reports – The Use of Annual Reports in Investment and Finance Decisions in a Developing Country," International Conference on Business Management & IS., vol. 1.

Biswas, Pallab & Bala, Swapan. (2016); “Usefulness of corporate annual reports to individual investors in Bangladesh.” International Journal of Disclosure and Governance. 13. 10.1057/jdg.2015.11.

Chen, S. & Hsu, K. 2005; “Perceived usefulness of annual reports and other information” Paper presented in the Research Forum Session at the annual meeting of the American Accounting Association, San Francisco.

Dawd, I., Burton, B., Dunne, T and Almujamed, H. (2018); “Corporate reporting and disclosures in the emerging capital of Kuwait: The perception of users and preparers” International Journal of Disclosure and Governance, 15, 61- 72.

Gassen, J. and K. Schwedler (2010), “The Decision Usefulness of Financial Accounting Measurement Concepts: Evidence from an Online Survey of Professional Investors and their Advisors.” European Accounting Review, Vol. 19, No. 3, pp. 495‒ 509.

Ho, S. S. M., and K. S. Wong. 2001; “A study of corporate disclosure practice and effectiveness in Hong Kong.” Journal of International Financial Management and Accounting 12 (1): 75 - 102.

Isam,S. & Nawaf, A. (2018); “Disclosure of financial statements and its effect on investors’ decision making in Jordanian commercial banks.” International Journal of Economics and Finance, 10 (2), 20-27.

Jagongo, A & Mutswenje, V.S. (2014); “A Survey of the Factors Influencing Investment Decisions: The Case of Individual Investors at the NSE.” International Journal of Humanities and Social Science, 4 (4), 92-102

Kabir, R. Md, Babar, Md & Haque, M.M. (2012); “Measuring investors’ perception towards the usefulness of annual report: An empirical evidence from Bangladesh.” Stamford Journal of Business Studies, 5(1), 1-19.

Kitindi, E., Magembe, B., & Sethibe, A. (2007), "Lending Decision Making and Financial Information: The Usefulness of Corporate Annual Reports to Lenders in Botswana, "The International Journal of Applied Economics and Finance, vol. 1, no. 2, pp. 55-66.

Mirshekary, S. (2005); “Expectation gap: Do companies disclose what users need in Iran?” Journal of Accounting, Business & Management, 12, 39-146.

Mirshekary, S., and S. Saudagaran. 2005; “Perceptions and characteristics of financial statement users in developing countries: Evidence from Iran.” Journal of International Accounting, Auditing and Taxation 14 (1): 33 – 54.

Naser, K., and R. Nuseibeh. 2003; “Users’ perceptions of corporate reporting: Evidence from Saudi Arabia.” The British Accounting Review 35: 129 - 153.

Pallab, K.B & Swapan, K.B. (2016); “Usefulness of corporate annual reports to individual investors in Bangladesh.” International Journal of Disclosure and Governance, 13, (2), 97–116.

Rahman, A. A. (2001); “The use and importance of annual reports by accountants in the service industry in Malaysia.” Asian Review of Accounting 9 (2): 117 – 128.

Rowbottom, N. & Lymer, A (2007); “User demand for management commentary: The operating and financial review.” Papaer presented at the European Association Conference, Lisbon. April.

Stainbank, L., and C. Peebles. (2006); “The usefulness of corporate annual reports in South Africa: perceptions of preparers and users.” Meditari Accountancy Research 1 (1): 69– 80.

Vestine, M., Kule, J.W. and Mbabazize, M. (2016); “Effect of financial statement analysis on investment decision making: A case of Bank of Kigali.” European Journal of Business and Social Sciences, 5 (6), 279-303.

DOI: https://doi.org/10.46336/ijbesd.v4i4.532