Dedicated To

My Respected Parents

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Declaration

I, Md. Mazharul Haque, the student of Master of Business Administration (MBA),

Department of Accounting and Information Systems, ID: 141325545, Session: 2013-2014,
would like to solemnly declare that, the Master paper on Voluntary disclosure in annual
reports: A study on banking companies of Bangladesh has been authentically prepared
by me. While preparing this paper, I didnt breach any copyright act intentionally. I am
further declared that, I didnt submit this report anywhere for awarding any degree, diploma
or any certificate.

Sincerely yours,

Md. Mazharul Haque

ID no: 141325545
Reg. no: 1133
Session: 2013-14
(MBA 3rd Batch)
Dept. of Accounting and Information Systems
Jatiya Kabi Kazi Nazrul Islam University
Trishal, Mymensingh.

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Supervisors Certificate

This is to certify that the master paper on Voluntary disclosure in annual reports: A study
on banking companies of Bangladesh has been submitted for the partial fulfillment of the
degree of Master of Business Administration (MBA) at Jatiya Kabi Kazi Nazrul Islam
University in Trishal, Mymensingh, carried out by Md. Mazharul Haque, student of the
department of Accounting and Information Systems under my supervision. His ID no. is
141325545 and Reg. no. is 1133. To the best of my knowledge and as per his declaration, no
part of this report has been submitted for any other degree, diploma or certificate.

He is permitted to submit this paper.

Dr. Shakhawat Hossain Sarkar

Associate Professor
Dept. of Accounting and Information Systems
Jatiya Kabi Kazi Nazrul Islam University
Trishal, Mymensingh.

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Acknowledgement

First and foremost, I would like to pay my gratitude to the almighty Allah, the most Merciful,
the Beneficent, for blessing me with good health and tenacity of mind to complete the
requirements for the degree. I am also grateful to my parents who provided me with the basic
necessities of life since my early childhood.

I would like to give thanks and express my deep gratitude to my honorable supervisor Dr.
Shakhawat Hossain Sarkar, Associate Professor, Department of Accounting & Information
Systems, for his excellent guidelines to prepare this report that enables me to complete this
master paper timely and properly. Really I am indebted to him.

I would also like to take the opportunity to pay my profound respect and heartfelt gratitude to
Professor Dr. Subrata Kumar Dey, Chairman of the Department of Accounting &
Information Systems for his affection, cooperation and guidance extended to me during
present study.

I would like to express my appreciation to the faculty members of Department of Accounting

& Information, who shared their valuable knowledge throughout my entire BBA and MBA
period.

I also like to express my deep sense of gratitude to all of my friends and those people who act
as the respondents of my research paper in carrying out this research work and also for giving
proper attention of inspiration in this connection.

The Author

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Table of Contents

Dedicated to i
Declaration ii
Supervisors Certificate iii
Acknowledgement iv
Table of Contents v
List of Table vii
List of Figure viii
Executive Summary ix

Chapter 1 Introduction 1-12

1.1 Introduction 02
1.2 Objectives of the Study 03
1.3 Scope of the study 03
1.4 Rationale of the Study 04
1.5 Methodology of the Study 04
1.5.1 Sample Selection procedures 05
1.5.2 Selection of Period 05
1.5.3 Data Sources 05
1.5.4 Development of voluntary disclosure index 06
1.5.5 Techniques Used for Data Analysis 08
1.5.6 Hypothesis Development 09
1.5.7 Statistical analysis techniques 10
1.6 Limitations of the Study 12

Chapter 2 Literature Review 13-16

2.1 Review of related and relevant literature 14

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Chapter 3 Theoretical Framework 17-25

3.1 Disclosure 18
3.2 Mandatory disclosure 18
3.3 Voluntary disclosure 18
3.4 Theories affect voluntary disclosure 19
3.4.1 Agency theory 19
3.4.2. Signalling theory 20
3.4.3. Capital Need Theory 20
3.4.4. Legitimacy theory 21
3.5. Determinants of voluntary disclosure 21
3.5.1. Information asymmetry 22
3.5.2. Corporate control contest 22
3.5.3. Stock compensation 22
3.5.4. Increased analyst coverage 23
3.5.5. Management talent signaling 23
3.5.6. Limitations of mandatory disclosure 23
3.5.7. Disclosure precedent 23
3.5.8. Proprietary costs 24
3.5.9. Agency costs 24
3.5.10. Political costs 24
3.5.11. Litigation costs 25

Chapter 4 Data Analysis and Findings 26-51

4.1. Examining the level of total voluntary information disclosure 27

4.1.1. Descriptive statistics of TVDIS 29
4.1.2. Frequency distribution of voluntary disclosure score 29
4.1.3. Highest and lowest ranking banks 30
4.1.4. The length of voluntary disclosure by information
categories 32
4.1.5. Summary of the voluntary disclosure score by information
categories 46

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 4.2 Examining the relationship between the banks attributes
and the level of voluntary disclosure 48
4.2.1. Descriptive statistics 48
4.2.2. Correlation analysis 49
4.2.3. Regression analysis 50

Chapter 5 Summary of Findings, Recommendations and Conclusion 52-55

5.1 Summary of findings 53

5.2 Recommendations 54
5.3 Conclusion 55

References & Appendixes 56-62

References 56
Appendix: 01 Voluntary disclosure checklist 58
Appendix: 02 Total voluntary disclosure score classified
into seven categories 60
Appendix: 03 Name of the sample banks with web address 61
Appendix: 04 Information of banks specific attributes 62

List of Table

Serial No. Name Page No.

Table 1.1 Number of voluntary disclosure items under each category 07
Operational definitions of variables, expected signs and
Table 1.2 11
relationships in the regression
Table 4.1 Voluntary disclosure scores per bank 28
Table 4.2 Descriptive statistics of TVDIS 29
Table 4.3 The dispersion of the disclosure scores 30
Table 4.4 Highest and lowest ranking banks 31
Table 4.5 Disclosure score of general corporate information 33
Table 4.6 Disclosure score of directors information and board structure 35

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 Table 4.7 Disclosure score of financial information 37
Table 4.8 Disclosure score of future forecast information 39
Table 4.9 Disclosure score of financial ratios and other information 41
Table 4.10 Disclosure score of accounting policies 43
Disclosure score on employee information, social responsibility
Table 4.11 45
and environmental policy
Table 4.12 Summary of the voluntary disclosure score 47
Table 4.13 Descriptive statistics of variables 48
Table 4.14 Pearson correlation analysis results 49
Table 4.15 Model summary 50
Table 4.16 ANOVA test results 51
Table 4.17 Coefficients 51

List of Figure
Serial No. Name Page No.
Figure 4.1 Disclosure position of the banks 31
Figure 4.1 Disclosure score on information categories 47

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Executive Summary

The aim of the study is to examine the voluntary disclosure in annual reports by banking
companies of Bangladesh. Data are gathered from annual reports of the banking companies of
Bangladesh of 2014. In this study ordinary least squares regression model is used to examine
the relationship between voluntary disclosure and banks specific attributes and un-weighted
approach of disclosure index is used for measuring voluntary disclosure index score. The
results show the positive relationship between the size and net profits of the banks and level
of voluntary information disclosure in the annual reports of the banks. However, other factors
such as age of incorporation return on assets, earnings per share and ownership structure
displayed no significant influence on the level of voluntary disclosure information in the
annual reports of the banking companies of Bangladesh.

Keywords: Voluntary Disclosure, Annual Reports, Banking Companies.

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