Financial Reporting Quality in Small Businesses Empirical Evidence from Bangladesh
Keywords:
Financial Reporting Quality in Small Businesses, Empirical Evidence from BangladeshAbstract
Research purpose: This study aims to explore the quality of financial reporting among small businesses in Bangladesh, focusing on identifying key challenges and the factors influencing current
reporting practices. Design/methodology/approach: A mixed-method approach was employed, utilizing both structured surveys and in-depth interviews. Primary data were collected from 200 respondents, including 120 small business owners and 80 accountants/financial managers.
Findings: The study found that the overall quality of financial reporting among small businesses is low, primarily due to manual bookkeeping, lack of proper financial records, low adoption of accounting tools, and limited financial literacy, where 50% of respondents exhibited only moderate
knowledge. Other key challenges include the absence of accounting systems, complex regulations, and a shortage of skilled manpower. However, maintaining proper records, enhancing financial literacy, and adopting accounting tools have been shown to significantly improve reporting quality and access to finance.
Value: This study provides current and context-specific insights into the financial reporting practices of small businesses in Bangladesh, a relatively under-researched area, offering empirical evidence to support future reforms. Practical implications: Recommendations include promoting financial education, encouraging the use of accounting software, providing government incentives for better reporting, and simplifying regulatory frameworks. Support programs should be designed to reward businesses that maintain transparent records. Research limitations: The study is based on a sample of 200 participants and focuses on selected areas within Bangladesh. Future studies with more diverse samples could provide a broader perspective.
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