As the ownership ratio of foreign and sponsor-directors in listed companies increases, the tendency to conceal real profits decreases. On the other hand, as institutional ownership increases, so does the tendency to hide real profits. This was stated by Bangladesh Institute of Capital Markets (BICM).

This information was given while presenting the essay at BICM Research Seminar 2 ‘ held at BICM Multipurpose Hall on Sunday (February 26) afternoon
.

BICM Professor Dr. presented the keynote address at the seminar. Nitai Chandra Debnath. The title of the article is
Ownership Structure and Real Earnings Management: An Espirical Study on Emerging Economy.

The executive president of the institute at the seminar. Mahmuda Akhter was present as a negotiator in the presidency of the Department of Accounting and Information Systems, Dhaka University Professor. Swapan Kumar Bala, Joint Secretary, Ministry of Finance, Mohammad Abu Yusuf. Besides, BICM Director Wajid Hasan Shah acted as the moderator of the seminar.

According to the research presented at the seminar, if the ratio of foreign and sponsor-director ownership in capital market companies in Bangladesh increases, the tendency to hide real profits decreases. On the other hand, as institutional ownership increases, so does the tendency to hide real profits. The reason given is that institutional investors often invest in short-term listed companies. As a result, their main goal is to make high profits by selling shares through short-term transactions, rather than ensuring good governance of the company in the long run.

The study further found that the Corporate Governance Code in Bangladesh failed to play a beneficial role in limiting real profit management.

Agreed with the results of the study. “Real profit management is not always bad, but we should comment on its long-term impact,” said Swapan Kumar Bala.

Joint Secretary. Mohammad Abu Yusuf said, “We also need to consider the impact of the new laws or policies that are being formulated to strengthen the capital market.”

Also, the executive president of the institute. Mahmuda Akhter said that good governance is very important in the run up to the transformation of Bangladesh from a LDC to a developing country and accurate statement of financial information can play a leading role in this regard.

BICM faculty teachers, officials and invited guests were present on the occasion.

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