...BANGLADESH STOCK MARKET GROWING? KEY INDICATORS BASED ASSESSMENT Abstract This paper focuses on the growth of Bangladesh stock market over time. The market trends in terms of market capitalization, market liquidity, market concentration, number of listings, volatility in the market index and foreign portfolio investment were considered. The study finds that key indicators are significantly correlated. Stock market growth index is constructed considering market capitalization ratio; turn over ratio, value traded to GDP ratio and volatility in market index. The findings of the study suggest that although Bangladesh stock market is growing over time, the growth has not yet assumed any stable and obvious trend. We conclude that Bangladesh stock market is still at an early stage of its growth path with a small market size relative to GDP and is characterized by poor liquidity and high market concentration. Introduction Demirguc-Kunt and Levine (1996), Singh (1997) and Levine and Zervos (1998) find that stock market growth plays an important role in predicating future economic growth in situations where the stock markets are active. The arguments of Demirguc-Kunt et al. (1996) indicate that economies without well-functioning stock markets may suffer from three types of imperfections: first, opportunities for risk diversification are limited for investors and entrepreneurs, second, firms are unable to optimally structure their financing packages and third, countries...
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...BANGLADESH STOCK MARKET GROWING? KEY INDICATORS BASED ASSESSMENT M Khokan Bepari Assistant Professor Department of Cooperation and Marketing Faculty of Agricultural Economics & Rural Sociology Bangladesh Agricultural University, Mymensingh-2202, Bangladesh Phone: +88 01716601759 khokan552@yahoo.com Dr. Abu Mollik Senior Lecturer and Finance Discipline Leader School of Commerce and Marketing Division of Business and Informatics Central Queensland University abumollik@yahoo.com.au Abstract This paper focuses on the growth of Bangladesh stock market over time. The market trends in terms of market capitalization, market liquidity, market concentration, number of listings, volatility in the market index and foreign portfolio investment were considered. The study finds that key indicators are significantly correlated. Stock market growth index is constructed considering market capitalization ratio; turn over ratio, value traded to GDP ratio and volatility in market index. The findings of the study suggest that although Bangladesh stock market is growing over time, the growth has not yet assumed any stable and obvious trend. We conclude that Bangladesh stock market is still at an early stage of its growth path with a small market size relative to GDP and is characterized by poor liquidity and high market concentration. Introduction Demirguc-Kunt and Levine (1996), Singh (1997) and Levine and Zervos (1998) find that stock market growth plays an...
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...BANGLADESH STOCK MARKET GROWING? KEY INDICATORS BASED ASSESSMENT M Khokan Bepari Assistant Professor Department of Cooperation and Marketing Faculty of Agricultural Economics & Rural Sociology Bangladesh Agricultural University, Mymensingh-2202, Bangladesh Phone: +88 01716601759 khokan552@yahoo.com Dr. Abu Mollik Senior Lecturer and Finance Discipline Leader School of Commerce and Marketing Division of Business and Informatics Central Queensland University abumollik@yahoo.com.au Abstract This paper focuses on the growth of Bangladesh stock market over time. The market trends in terms of market capitalization, market liquidity, market concentration, number of listings, volatility in the market index and foreign portfolio investment were considered. The study finds that key indicators are significantly correlated. Stock market growth index is constructed considering market capitalization ratio; turn over ratio, value traded to GDP ratio and volatility in market index. The findings of the study suggest that although Bangladesh stock market is growing over time, the growth has not yet assumed any stable and obvious trend. We conclude that Bangladesh stock market is still at an early stage of its growth path with a small market size relative to GDP and is characterized by poor liquidity and high market concentration. Introduction Demirguc-Kunt and Levine (1996), Singh (1997) and Levine and Zervos (1998) find that stock market growth plays an...
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...Executive Summary Over the last few years, the capital market of Bangladesh has witnessed a haughty growth which is not in line of development in the real sector of the economy. Although, the Securities and Exchange Commission (SEC) of Bangladesh has tried to correct the irregular behavior observed in the market, very often it is argued that lack of proper and firm decisions from the regulator’s side has contributed to make the market more unstable rather than to reduce it. The paper attempts to identify the inter relationship between the capital market and money market. The Capital Market of Bangladesh is passing tough times since December 2010 as high volatility is eroding the capital of Thousands of Investors that might turn into social instability. This fall is caused by many factors that I tried to identify and tried to link up between causal factors of market crash and regulatory failure and also tried to find out the inter-relationship between capital market and money market. Primary issue related problems was faulty listing methods and IPO overpricing, few numbers of new listings, revaluating assets before company listing, high premium in issuance of right share/Repeat IPO etc. while secondary market related problems was stock splits and stock price manipulations through block trading, circular trading and insider trading. Investor’s greed and irrational behavior played a big rule to make the stock prices sky rocking as they were crazy to buy shares without judging...
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...Efficient Market Hypothesis: Examining the Case of South Asian Stock Markets Sharon Prakash Abstract This study examines the relevance of the Efficient Market Hypothesis among emerging stock markets belonging to the South Asian Association for Regional Cooperation (India, Pakistan, Sri Lanka and Bangladesh) and the Global economy. The study employs daily closing prices of eminent market indices from a time period 2004-2013.The stock returns have been subjected to unit root tests such as the Augmented Dickey Fuller test and a panel unit root test. Additionally the existence of random walk for these stock markets has also been examined through the Jarque-Bera statistic. The results indicate information inefficiency in the time period under study for all indices. Investors can therefore predict future prices on the basis of historical information, and receive excessive returns. The results have implications for developing economies wherein the government has to ensure that all asset related information be made public, to curb state interference. Introduction The concept of Efficient Market Hypothesis (EMH) holds special importance in the field of Finance, especially Capital markets. This hypothesis postulates that markets are informationally efficient. This asserts that the price of any security will fully reflect all the information that is available to the investors. That being said, one cannot consistently achieve returns that are excess of the average market returns on...
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...describing it as half empty. While both statements are factually correct, they paint different picture and thus convey different images. Creativity in company accounting may arise under at least three different financial market conditions. The first is when a company floats its shares to attract investors to subscribe to such shares either at par or at a premium, depending on the financial market evaluation of the company’s future prospects. The second is when the company whose shares are already listed in a stock exchange, wants to paint an attractive picture of its financial conditions so that the shares may be quoted at a premium. Finally, a company having its shares listed in the stock exchange may declare and pay high dividends based on inflated profits through overvaluation of assets, undervaluation of liabilities and change in systems of stock valuation that may boost the image of the company at least in the short run. Unethical considerations in creative accounts have developed to such depths that terms like fraud audit and forensic accounting have gained currency and are becoming new professions. Accounting practitioners and auditors are increasingly required to appear in courts for deposition This paper is an outcome of a study of Creative Accounting in Bangladesh and global perspectives. Global scenario is included in the study to illustrate the extent of creative accounting practice. Creative accounting could be a blessing or a curse. It is a blessing where something new...
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...ADMINISTRATION & ECONOMICS Identifying the Critical Issues of Stock Market: A Study on Dhaka Stock Exchange (DSE) Md. Moniruzzaman Sarker1*, Nusrat Nargis2* 1 2 Senior Lecturer, School of Business & Economics, United International University, Bangladesh. Senior Lecturer, Department of Business Administration, Daffodil International University, Bangladesh. *Corresponding author’s email: mrajib.sarker@gmail.com, mishu_fin@yahoo.com Article History Received: 19-05-2012 Accepted: 13-06-2012 Available online: 31-07-2012 ABSTRACT Bangladeshi Stock Market has experienced a big crash twice from its inception. In 1996, the market was crashed because of speculative bubble whereas; it was an asset bubble in the year 2011. The stock price was overvalued this time. Price was inflated about 500-700 percent compare to the face value. DGEN Index climbed at point 8918.51 on December 05, 2010 which signaled a steeper bubble. Our study postulates the present scenario of Bangladesh Stock Market through various quantitative and qualitative data which are extracted from the secondary sources. Quantitative data are gathered from the web site of Dhaka Stock Exchange and other qualitative data are collected from published research journals, newspapers, websites etc. This study has revealed that, Gap between the Demand and Supply of stock, extraordinary over pricing of stock, market manipulation, lack of knowledge about the stock market mechanism among the general investors, price distortion, inefficient...
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...World Review of Business Research Vol. 2. No. 2. March 2012. Pp. 16 - 31 Corporate Governance-Its Problems & Prospects in Banking Industry in Bangladesh Begum Ismat Ara Huq* and Mohammad Zahid Hossain Bhuiyan** Corporate Governance ensures to bring transparency, accountability and professionalism in the management system of a corporate body that enhances the credibility and acceptability to the shareholders, employees, potential investors, customers, lenders, governments and all other stakeholders. This is more true in case of Banking Industry. Since Banks deal in public money, public confidence is of outmost importance in this Industry. The study aims at finding out problems & deficiencies involved in Corporate Governance practice in Banking Industry in Bangladesh and also suggesting ways and means to remove the same in order to make the Corporate Governance practice sound and effective. In this study, both the primary and secondary data were used. The primary data relating to problems involved in Corporate Governance practice and suggestions to remove the same were collected on the basis of a questionnaire by interviewing 24 randomly selected Bank personnel such as Directors of the Board as the internal part of management and the Auditors as the external group. The secondary data were collected through an extensive literature survey on the subject. The study has identified some major problems in Corporate Governance practice in the Banking Industry of the country. The prospect...
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...World Review of Business Research Vol. 2. No. 2. March 2012. Pp. 16 - 31 Corporate Governance-Its Problems & Prospects in Banking Industry in Bangladesh Begum Ismat Ara Huq* and Mohammad Zahid Hossain Bhuiyan** Corporate Governance ensures to bring transparency, accountability and professionalism in the management system of a corporate body that enhances the credibility and acceptability to the shareholders, employees, potential investors, customers, lenders, governments and all other stakeholders. This is more true in case of Banking Industry. Since Banks deal in public money, public confidence is of outmost importance in this Industry. The study aims at finding out problems & deficiencies involved in Corporate Governance practice in Banking Industry in Bangladesh and also suggesting ways and means to remove the same in order to make the Corporate Governance practice sound and effective. In this study, both the primary and secondary data were used. The primary data relating to problems involved in Corporate Governance practice and suggestions to remove the same were collected on the basis of a questionnaire by interviewing 24 randomly selected Bank personnel such as Directors of the Board as the internal part of management and the Auditors as the external group. The secondary data were collected through an extensive literature survey on the subject. The study has identified some major problems in Corporate Governance practice in the Banking Industry of the country. The prospect...
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...World Journal of Social Sciences Vol. 1. No. 3. July 2011. Pp. 1-15 Cosmetic Accounting Practices in Developing Countries: Bangladesh Perspectives Asif Mahbub Karim 1 , Rehana Fowzia 2 and Md. Mamunur Rashid Cosmetic accounting is a process whereby accountants use their knowledge of accounting rules to manipulate the figures reported in the accounts of a business. This study expresses the views of External Auditors, Internal Auditors, and the Accountants on causes, techniques, effects and solution for Cosmetic Accounting. To achieve these purposes total 108 respondents have been surveyed. Findings from descriptive statistics reveal that the perceptions of three categories respondents are different about the various aspects of cosmetic accounting .It also shows the opinions of internal auditors, external auditors and accountants raised some concerns as to whether these circumstances will last. 3 Field of Research: Accounting. Keywords: Cosmetic Accounting, Accountants. External Auditor, Internal Auditor, 1. Introduction Creative accounting is referred to also as income smoothing, earnings management, earnings smoothing, financial engineering and cosmetic accounting. The preferred term in the USA, and consequently in most of the literature on the subject is „earnings management‟, but in Europe the preferred term is „creative accounting‟ and so this is the term that will be used in this paper. It should be recognized that some accounting manipulation involves...
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...ICOAE 2010 299 DOES STOCK MARKET DEVELOPMENT CAUSE ECONOMIC GROWTH? A TIME SERIES ANALYSIS FOR BANGLADESH ECONOMY MD. SHARIF HOSSAIN (PH. D.)1 - KHND. MD. MOSTAFA KAMAL2 Abstract In this paper the principal purpose has been made to investigate the causal relationship between stock market development and economic growth in Bangladesh. To investigate long-run causal linkages between stock market development and economic growth the Engle-Granger causality and ML tests are applied. In this paper another attempt has been made to investigate the non-stationarity in the series of stock market development and economic growth by using modern econometric techniques. The co-integrated tests are applied to know whether this pair of variables shares the same stochastic trend or not. From our analysis it has been found that the stock market development strongly influences the economic growth in Bangladesh economy, but there is no causation from economic growth to stock market development. Thus unidirectional causality has prevailed between stock market development and economic growth in the Bangladesh economy. Also it has been found that all the variables are integrated of order 1, and both the variables stock market development and economic growth share the same stochastic trend in Bangladesh economy. JEL Code: C010 Key Words: Stock Market Development, Causal Relationship, Non-stationarity, Unit Root Test, Co-integrated Tests 1 Introduction Stock market development plays an...
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...Human Resource Accounting Human Resource Accounting Literatur Review To measure human value as a part of the goodwill, HRA was introduced in the accounting literature in the 1960s (Flamholtz, 1985). In 1968 Brummet, Flamholtz & Pyle used the term “human resource accounting” for the first time. In 1973 the American Accounting Association’s Committee on Human Resource Accounting defined HRA as “the process of identifying and measuring data about human resources and communicating this information to interested parties. It provides information about human resource costs and values, serves to facilitate to decision making, and motivates decision makers to adopt a human resource perspective (Sackmann et al., 1989,). Research to examine the way in which human resource variables affect the efficiency of firms could be performed in a number of ways including analyzing the association between different aspects of human resources and firm performance (Bassi & McMurrer, 1998; Boudreau & Ramstad, 1997; Grojer, 1998). Looking at different proposals (Conner, 1991), the resource theory considers human resources in a more explicit way. This theory considers that the competitive position of a firm depends on its specific and not duplicated assets. The most specific (and not duplicated) asset that an enterprise has is its personnel. It takes advantage of their interdependent knowledge. That would explain why some firms are more productive than others. With the same technology, a solid human...
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...World Journal of Social Sciences Vol. 1. No. 3. July 2011. Pp. 1-15 Cosmetic Accounting Practices in Developing Countries: Bangladesh Perspectives Asif Mahbub Karim 1 , Rehana Fowzia 2 and Md. Mamunur Rashid Cosmetic accounting is a process whereby accountants use their knowledge of accounting rules to manipulate the figures reported in the accounts of a business. This study expresses the views of External Auditors, Internal Auditors, and the Accountants on causes, techniques, effects and solution for Cosmetic Accounting. To achieve these purposes total 108 respondents have been surveyed. Findings from descriptive statistics reveal that the perceptions of three categories respondents are different about the various aspects of cosmetic accounting .It also shows the opinions of internal auditors, external auditors and accountants raised some concerns as to whether these circumstances will last. 3 Field of Research: Accounting. Keywords: Cosmetic Accounting, Accountants. External Auditor, Internal Auditor, 1. Introduction Creative accounting is referred to also as income smoothing, earnings management, earnings smoothing, financial engineering and cosmetic accounting. The preferred term in the USA, and consequently in most of the literature on the subject is „earnings management‟, but in Europe the preferred term is „creative accounting‟ and so this is the term that will be used in this paper. It should be recognized that some accounting manipulation involves...
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...Factors affecting on stock price 1. Introduction The stock market has become an essential market playing a vital role in economic prosperity that fostering capital formation and sustaining economic growth. Stock markets are more than a place to trade securities; they operate as a facilitator between savers and users of capital by means of pooling of funds, sharing risk, and transferring wealth. Stock markets are essential for economic growth as they insure the flow of resources to the most productive investment opportunities. In essence, a large number of economic variables like gross domestic product, interest rates, current account, monthly supply, employment, their information etc. have an impact on daily stock prices (Kurihara, 2006). This paper reflects how stock price is determined by considering the effect of different factors and outlines whether the internal, external and economic factors have impact on stock pricing. This study is about to know whether Dividends, paid up capital, market capital, corporate social responsibility, lawsuits, Retained Earnings, AGM, EGM, Earning Per Share, Rumors, Margin Loan, Net Income, Face Value, Return on Investment, Goodwill of the firm, Company News, Analysts Report, Sentiment, Rumors, etc. depends on stock price or merely some special factors like stock dividend, P/E ratio, government policy, macroeconomics fundamental, investors sentiment...
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...Exchange Rate Stock Price CHAPTER THREE 3.1) introduction This chapter is particularly focused on the various previous studies, which tries to explore the relationship between the exchange rate and stock price. Many studies had been conducted in context to the relation between the exchange rate and stock prices, some studies even have analyzed the relation by considering some of the other variables (like FDI, interest rate, inflation rate ect), to see if these variables have any influence on the fluctuating exchange rate and stock prices. The current literature provides year by year explanation about the Different opinions and arguments of various researches on the relationship between exchange rate and stock prices. For the easy understanding the chapter will be divided into two sections. The first section will cover all the research papers published prior to 1990's. one can observe that most of the studies in section one had established the relationship by measuring the exposure from fluctuating exchange rates to stock prices, so we will name this part as “literature review on measuring the exposure'. And in second section; we cover all the research papers which are published after 1990's and one can observe that some of the studies have established the relation by measuring the causal relation between the exchange rate and stock prices, so we would name the second part as” literature review on measuring the causality relation between the exchange rate and stock prices'....
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