A Study on Accounting Ratios to Determine Change in Market Share Price of Dhaka Stock Exchange With Reference to Commercial Banks of Bangladesh

Abstract

Abstract: The share market in Bangladesh has seen a major turmoil in 2010-2011. The reasons behind it are believed to be several and investigation is still going on. The paper aims to determine if change in company market share price could have been predicted by the financial indicators of the company. The study focuses on the private commercial banks in Bangladesh as it is a growing industry playing a significant role in the capital market of the nation. In Bangladesh, there are 30 private commercial banks listed in the Dhaka Stock Exchange. Of them, 23 banks are selected for the study on the basis of data availability for the ten-year period of January 2005 to December 2014. Accounting ratios indicating bank profitability, efficiency, risk, liquidity, and asset quality are chosen as bank financial indicators. Statistical tools as multivariate regression and correlation have been used on the 230 bank-year observations. Multi-collinearity among the final indicators has also been tested. It is seen that selective accounting ratios can be fine determinants of share price change in the financial market of Bangladesh.