Timing, Recurrence, and Effects of Fixed Asset Revaluation: Evidence From Bangladesh

Abstract

This study intended to explore when and how often fixed asset revaluation (FAR) is practiced in Bangladesh and explain the impacts of FAR on net asset value (NAV), stock prices, and debts of companies. Based on 175 listed companies on the Dhaka Stock Exchange, this study found increasing use of the revaluation model where the textile industry witnessed the highest number of revaluations. Most of the listed companies were irregular revaluer, and they performed FAR during the bull market in 2010. Most newly listed companies did it just before their initial public offerings (IPO). The results of the Wilcoxon signed-rank test imply that the changes in NAV, stock prices, and total debts after revaluation were statistically significant. This study found evidence of enhancing debt capacity and stock prices of several companies through improved NAV. The findings will assist regulators to recognize the consequence of revaluation and enable them to take an appropriate stance for controlling abusive and creative reporting. The study will also make investors cautious about companies with revaluation induced assets. This study suggests that companies practicing the revaluation model should perform FAR on regular intervals to reduce information asymmetry about assets' value and thus help improve investors' confidence.

Fenomenologi Revaluasi Aset di Sektor Publik

“…Sejalan dengan penelitian Bae et al, (2019) yang menyatakan bahwa revaluasi aset tetap memiliki efek positif pada keberlanjutan dengan meningkatkan ketepatan waktu dan relevansi informasi yang diungkapkan, sehingga mengurangi risiko jatuhnya harga saham. Artinya, fair value (nilai wajar) dalam hasil revaluasi secara berkala dapat mengurangi asimetri informasi tentang nilai aset dan dengan demikian membantu meningkatkan kepercayaan investor (Rahman et al, 2021).…”

Perception of Generation Z on Stock Market Investment in Rajkot City

“…It also provides insight into the role of psychology in market efficiency and suggests potential actions that can be taken to mitigate the effects of overconfidence (as likewise investigated by: Bilgehan, 2014;Grežo, 2021). Rehman & Hossain (2022) conclude in his research Impact of fixed asset revaluation practice on investor perception in Bangladesh stock market. This study utilized a sample of 191 investors in Bangladesh to analyze their perception of fixed asset revaluation (FAR) (as likewise investigated by: Rahman & Hossain, 2022;Rahman & Syed, 2023;Javorská, 2021).…”

“…Rehman & Hossain (2022) conclude in his research Impact of fixed asset revaluation practice on investor perception in Bangladesh stock market. This study utilized a sample of 191 investors in Bangladesh to analyze their perception of fixed asset revaluation (FAR) (as likewise investigated by: Rahman & Hossain, 2022;Rahman & Syed, 2023;Javorská, 2021). The findings suggest that investors are highly suspicious of the motives and fairness of FAR in Pratik Pravin & Shailesh J. Parmar.…”