Measurement and Analysis of Disclosure Level: The Case of Bangladesh
Disclosure
220
100%
200
100%
91%
Table shows that the respondents cancelled 9 percent of the items from general, company profile, director’s report and financial highlight section and no item were cancelled from accounting polices, income statement, balance sheet, cash flow statement disclosure section. Therefore, 91 percent items of draft disclosure check list were finalized for the current study.
Annual Reports of sample companies
The following companies’ annual reports were collected from various sources for the current study:
Food and Allied
Textile
Pharmaceutical
Cement
Apex Foods Ltd
HR Textile Mills Limited
The Ibn Sina Pharmaceutical Industry Ltd.
Heidelberg cement Bangladesh Ltd.
Fu-Wang Foods Ltd
BEXTEX Limited
Libra Infusions Ltd.
Meghna Cements Mills Ltd.
Gulf Foods Ltd
Apex Weaving and Finishing Ltd
Square Pharmaceuticals ltd.
Aramit Cement Ltd.
Fine Foods Ltd
Saiham Textile Mills Ltd.
Beximco Pharnaceuticals Ltd.
Confidence Cement Ltd.
Rahima Foods Corporation Ltd
Alltex Industries Ltd.
Orion Infusion Ltd.
Lafrage Surma Cement Ltd.
Scoring of the sample companies against
Each annual report was examined in support of the final disclosure checklist by following dichotomous procedure. MS Excel software was used extensively.
Development of Disclosure Index
Disclosure Index was developed by following Pertial Compliance unweighted approach due to its superiority over the dichotomous approach. Example-
Suppose three are section of disclosure A, B and C. Required for disclosure 3 items in A, 5 items in B and 9 items in C.
If a Company discloses 1 item from A, 2 items from B and 7 items from C
Under Dichotomous Approach,
ODI = 10/17 = 0.59 or 59%
Under PC Approach,
ODI = (1/3 + 2/5 + 7/9) /3 = 0.50 or 50%
On the other hand, if the Company discloses 3 item from A, 4 item from B and 3 item from C
Under Dichotomous Approach
ODI = 10 / 17 = 0.59 or 59%
Under PC Approach
ODI = (3/3+4/5+3/9)/3 = 0.74 or 74%
From the above example it is clear that PC Approach provides more accurate result than Dichotomous approach. Hence, in developing the disclosure index, PC approach was used to get the clearer picture of the sample companies.
Segment Wise Disclosure Level
The following table shows that the highest ODI 72 percent in the pharmaceuticals segment and the lowest ODI 63 percent in the textile segment. The overall disclosure index among the business segment is 67 percent. Again, the highest overall disclosure index 80 percent in the income statement section and the lowest is 55 percent in the cash flow statement disclosure section
Summary of Disclosure Index
Serial No.
Section of Disclosure
Business Segment
ODI
(Section wise)
Textile
Pharma
Food and Allied
Cement
1
General Disclosure Items
0.81
0.82
0.75
0.76
0.79
2
Company Profile Items
0.61
0.78
0.72
0.61
0.68
3
Dirtectors Report Items
0.64
0.81
0.64
0.76
0.71
4
Financial Highlight Items
0.63
0.49
0.45
0.52
0.52
5
Accounting Policies Items
0.61
0.70
0.63
0.58
0.63
6
Income Statement Items
0.74
0.86
0.81
0.81
0.80
7
Balance Sheet Items
0.59
0.69
0.69
0.72
0.67
8
Cash Flow Statement Items
0.45
0.59
0.61
0.57
0.55
ODI (Sector wise)
0.63
0.72
0.66
0.67
0.67
The table also shows that the pharmaceutical companies are disclosing more information in the general disclosure section, company profile section, director’s report section, accounting policies section and income statement section among sample companies. Textile companies are disclosing more