Determinants of the Related Party Disclosure Practice by Non-Financial Sectors in Bangladesh
Rokhshana Akter1, Amirus Salat2
1Rokhshana Akter, MBA, Department of Accounting & Information Systems, University of Dhaka, Dhaka 1000, Bangladesh.
2Amirus Salat, Professor, Department of Accounting & Information Systems, University of Dhaka, Dhaka 1000, Bangladesh.
Manuscript received on 14 September 2023 | Revised Manuscript received on 24 September 2023 | Manuscript Accepted on 15 October 2023 | Manuscript published on 30 October 2023 | PP: 11-22 | Volume-10 Issue-2, October 2023 | Retrieval Number: 100.1/ijmh.B16581010223 | DOI: 10.35940/ijmh.B1658.1010223
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Abstract: This study attempts to find out the determinants that have a significant impact on the extent of related party disclosure. Although associated parties are one of the most important reasons for corporate scandals, very few studies have been conducted to find the determinants of related party disclosures, particularly from a developing country’s perspective. This motivated the authors to find the determinants of related party disclosures. For conducting this study, a disclosure index comprising 28 disclosure items was prepared, and the annual reports of 102 listed nonfinancial firms for the year 2019-2020 of the Dhaka Stock Exchange (DSE) were scrutinised against this disclosure index. The findings show that the related party disclosure by the sample companies averages 37.36%, indicating that the current scenario of related party disclosure is not satisfactory. A regression analysis was conducted to identify the determinants of related party disclosures. The results show that the association between the extent of related party disclosure and the Multinational Subsidiary is statistically significant. The Security Category has a negative but significant impact on the importance of disclosure. The result of this study will add value to the existing literature by providing the empirical evidence of the determinants of related party disclosures from a developing country’s perspective. From a practical standpoint, the outcome of this paper will help regulators, such as the Securities and Exchange Commission (SEC), develop a framework for related-party disclosure requirements. The results of this study will also support future accounting researchers in this area and investors in making informed investment decisions on non-financial companies.
Keywords: Related Party Disclosures, Non-Financial Sector, Multinational Subsidiary, Security Category, DSE.
Scope of the Article: Financing Business and Accounting