Relationship between the Corporate Disclosure and Profitability: An Empirical Analysis of the Commercial Banks in Bangladesh

Abstract

Disclosure is essential for interested users to make logical decisions. This study evaluates the extent of corporate disclosure and its relationship with the profitability attributives of banking companies in Bangladesh. To achieve the study purpose, this study has taken five private commercial banks in Bangladesh for five years from 2016 to 2020. The required data have been collected mainly from secondary sources. To reach the study findings per study objectives, the researcher has employed different statistical techniques, analyzed the various annual reports to calculate the level of corporate disclosure, and identified the different profitability attributives. The results of descriptive statistics show that the highest mean value is visible in the case of SB_3, and the lowest mean value is visual in the case of SB_4, but SB_4 and SB_5 show the lowest and highest standard deviation values. The ANOVA test results show significant variation in the level of corporate disclosure and different profitability attributes among the sample banks over the study period. The simple regression results show a substantial relationship between the corporate disclosure scores and profitability attributives. The effects of multiple regression present that other profitability attributes like profit before tax and earnings per share significantly impacted corporate disclosure scores. However, the remaining attributes, like operating profit, profit after tax, return on equity, and return on asset, had an insignificant positive impact on the corporate disclosure scores of the sample banks over the study period. This research study has recommended that the management of the banking companies should take necessary steps to ensure an adequate level of corporate disclosure in reporting practices because the different stakeholders make any decision based on disclosing information.