FINANCIAL DISCLOSURE AND ITS IMPACT ON COMMON INVESTORS OF BANGLADESH
CHAPTER 1
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Accounting information becomes relevant if it is capable of influencing a decision maker. It helps decision maker by providing predictions about the outcomes of past, present, and future events. Before taking final decisions, users get confirmation or correction on prior expectations through information’s relevancy, timeliness, and accuracy. Based on this reliable and timely information decision makers assess the timing and uncertainty of current and future cash flows for making prudent, effective and efficient decisions for maximizing their value and making other investment decisions such as choosing a portfolio of securities. Basically, financial reports are published to serve various users like, shareholders, employees, suppliers, creditors, financial analysts, stockbrokers, management, and government agencies. Firms satisfy this demand in part by supplying accounting information, thereby enabling them to raise capital on the best available terms. An efficient financial reporting and disclosure system is crucial to country’s development of economically efficient public corporations and public securities markets, as well as the development of the economy. The financial report of an organization is much more than just the financial statements; because it reflects the overall scenario of that organization by providing financial statements along with additional information. This additional information is known as the financial disclosures. The extent and quality of disclosure within these published reports vary from company to company and also from country to country.
Economic phenomena are presented in annual reports. Specially, the conditions of uncertainty of economy have a shadow on this report; for this reason it can never be completely free from biasness. Many estimates and assumptions are included in the annual report. Completely biased report cannot be achieved, because a certain level of accuracy
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
Accounting information becomes relevant if it is capable of influencing a decision maker. It helps decision maker by providing predictions about the outcomes of past, present, and future events. Before taking final decisions, users get confirmation or correction on prior expectations through information’s relevancy, timeliness, and accuracy. Based on this reliable and timely information decision makers assess the timing and uncertainty of current and future cash flows for making prudent, effective and efficient decisions for maximizing their value and making other investment decisions such as choosing a portfolio of securities. Basically, financial reports are published to serve various users like, shareholders, employees, suppliers, creditors, financial analysts, stockbrokers, management, and government agencies. Firms satisfy this demand in part by supplying accounting information, thereby enabling them to raise capital on the best available terms. An efficient financial reporting and disclosure system is crucial to country’s development of economically efficient public corporations and public securities markets, as well as the development of the economy. The financial report of an organization is much more than just the financial statements; because it reflects the overall scenario of that organization by providing financial statements along with additional information. This additional information is known as the financial disclosures. The extent and quality of disclosure within these published reports vary from company to company and also from country to country.
Economic phenomena are presented in annual reports. Specially, the conditions of uncertainty of economy have a shadow on this report; for this reason it can never be completely free from biasness. Many estimates and assumptions are included in the annual report. Completely biased report cannot be achieved, because a certain level of accuracy