Introduction

Background of the study

• Bangladesh is the second highest emerging country
in the south East Asia and attempts to fulfill vision S
DG for this a strong and healthy financial system is r
equired.
• Maintain a gradual GDP growth rate from last deca
des and estimated 8.13% GDP growth rate in fiscal y
ear 2013-2020.
Introduction
• Adverse financial situation has put the concept of c
orporate governance at centre stage. It minimises t
he abuse of shareholders by top management.
• Corporate governance enhance the performance of
the board of directors in companies, promote inter
nal control, monitor the implementation of strategi
es and identify the roles and responsibilities of stak
eholders.
Introduction
Effects of Corporate Governance on the stock
price:
• Stability of financial market, increases competitiven
ess enhance transparency.
• Stakeholders interests
• Leads to lower the cost of capital, high demand for
share.
Introduction
Objective of the study:
• To examine the impact of corporate governance on the stock price
movement in Bangladesh.
• Finding of our research will help the policy makers to improve corp
orate governance in the country.
• To show the effects of company’s specific variables such as EPS, Net
Profit and P/E raito.
• Improving corporate governance companies can rebuild public trust
in companies and financial markets.
• Adoption of good corporate governance will helps companies achie
ve better performance with effective management and ideal workin
g environment.
Introduction
Limitations of the study
• There is a Scarcity of availability of data in Bangladesh.
• Primary sources of data are not available to collect. So
this study is performed based on secondary sources of
data.
• We face some problems in manipulation of data.
• We face a time constraints in performing this study.
• The market of Bangladesh is imperfect market.
• The nature of Bangladesh economy is volatile.
Now Presenting
Anisur Rahman
M190203023
Literature Review
Author Name Publishing year of Journal The impact of corporate
Article governance on stock
price
Mohamed, M. Elewa 2016 Positive
Samontary, Durga Prasad 2010 Positive
Malik, Saif Ullah 2012 Positive
Ronoh, Evans Kipngeo 2014 Positive
SAKWA, MARTIN BARASA 2006 Positive
Saeed; Mubarak; 2016 Positive
Hamdan, Mousa
Heracleous, Lizos 2001 Positive
Gupta, Pooja; Sharma, 2014 Positive(Limited)
Aarti Mehta
Literature Review (continue
d)
Author Name Publishing year of Journal The impact of corporate
Article governance on stock
price
Andreou; Antoniou; 2012 Positive
Horton; Louca
Bauer, Rob; Frijins, Bart; 2008 Positive
ROger Otten, Alireza
Tourani-Rad
Yameen, Mohammad; 2019 Some variables have
Farhan, Najib H.; Tabash, positive impact and some
Mosab I. have negative impact.
Hunjra, Ahmed Imran; 2020 Some variables have
Mehmood, Rashid; positive impact and some
Tayachi, Tahar have negative impact.
Karamoy, Herman; Tulung, 2020 Negative
Joy E.
 Research Methodology
*Research methodology is a technique to show overall
procedures.
*It helps a research to know how to come across the result.
*In this study we have used five steps in research methodology.

Research approach:
* Quantative method has been used.
*Linear Regression model has been used to analyze data.
*Descriptive statistics is used to present data analysis.
* To find impact six variables has been used.
* Statistical software E-views and MS Excel is used.
 Research Methodology
Sampling Technique:
* This study used 5 listed non bank FI among 23.
* we used simple random sampling method to select
population.
* The five FI are:
1.ICB ltd.
2. IPDC Finance ltd.
3.First Finance ltd.
4. Uttara Finance and Investment ltd.
5. Bangladesh Industrial Finance Company ltd.
 Research methodology
Variables: We found six variables from several study that can
be appropriate for this study.
1. Dependent variables: stock price
2. Independent variables: Price to earning ratio (P/E ratio),
Governmental Effectiveness ( GOVEF), Corporate social
responsibility( CSR), Divided per share ( Dividend), Number of
independent Directors( NIDIR).
Data Collection:
*All data is collected from the secondary sources.
* The main source is the annual report for period 2010- 2019.
 Research methodology
Econometric model:
* Descriptive statistics has been used to show mean, SD,
skewness and value of data.
* Correlation matrix is presented to show multicollinearity.
* To show the relationship between independent and
dependent variables OLS model has been used using 10 years
time series data.
The basic linear model is:
Y = α + β1X 1+ β2X2 + ………..+ βnXn + ε

In this study this model can be written as :

Stock price= α + β1P/E ratio + β2GOVEF + β3CSR + β4Dividend + β5
NIDIR + ε
 Analysis and Findings
 Summary statistics Analysis
Variable Mean S.D. Skewness Kurtosis

P/E ratio 38.913 0.484 3.1732 11.730

GOVEF 0.9400 0.239 -3.7055 9.3412

CSR 0.9000 0.303 -2.6667 5.1111

Dividend 12.899 1.582 0.92445 -0.5997

NIDIR 3.2000 2.432 1.2422 -0.0842

 Correlation Analysis
Correlation

t-Statistic

Probability
P/E Ratio GOVEF CSR Dividend NIDIR

0.193156 0.235314 0.562093 0.279111 0.225314

Share Price 3.197424 0.670035 1.288351 0.964019 0.767005

0.1025 0.0592 0.0441 0.0358 0.0292

Ordinary Least Squares
(OLS) Model
Variable Coefficient Std. Error t-ratio p-value

P/E ratio 0.149002 0.060701 2.455 0.0187 **

GOVEF 1.050268 1.030313 3.3022 0.0021 ***

CSR 3.06294 2.251921 0.4939 0.0324 **
Dividend 1.66976 0.195102 8.558 0.0015 ***
NIDIR 0.188066 1.60598 3.853 0.0004 ***
R-squared 0.453320 Adjusted R-squared 0.295248

S.E. of regression 0.043017

 Autocorrelation Test
In Hypothesis test tells:
• Null hypothesis H0: No autocorrelation/serial correlation in residuals.
• Alternative hypothesis Ha: Autocorrelation in residuals.
If p value is greater than .05 or 5% accept null

Particulars value   Result

Durbin-Watson statistic 2.43671   No

Accept Autocorrelation
p-value 0.66217 Null problem
Multicollinearity Test
If Variance inflation factor (VIF) is more than 10, Multicollinearity problem
prevails in the model.

Variables Value

P/E ratio 1.453

GOVEF 3.516
CSR 1.423
Dividend 5.612
NIDIR 1.472
 According to Variance inflation factor (VIF) the value of all the variables i
s less than 10 so there is no evidence of excessive Co-linearity in the mo
del.
 Conclusion
 From the regression result we can see that all variables have significant i
mpact on share price.
 But Dividend, number of independent directors and Governmental effe
ctiveness has the most significant impact on share price.
 One unit increase in dividend, number of independent directors and Go
vernmental effectiveness are reasonable to 1.69, 0.18 and 1.05 unit incr
ease in share price respectively.
 One unit increase in corporate social responsibility causes a 3.06 unit inc
rease in share price.
 Where one unit increase in P/E ratio causes a 0.14 unit increase in share
price.
 Recommendation
Governmental effectiveness shows a significant positive imp
act on stock price. so, FI should emphasis on increase gover
nmental effectiveness.
 CSR is not only important to increase stock price, it has muc
h more importance to the society. So, FI management shoul
d contribute on CSR. If needs should keep extra budget on t
his sector.
 The dividend policy should be based on investors and the m
anagement should provide dividend in a regular basis.
 Recommendation
 According to the regulations of Bangladesh Bank, a FI instit
ution must have at least one third of independent directors
among total number of directors. The NIDIR has a positive si
gnificant impact on stock price. So, FI management should tr
y to keep maximum number of independent directors.
 Though beyond these factors other micro and macro econo
mical factors affect stock price, the management of FI shoul
d keep especial attention on these factors and strictly obey t
he regulations of BB.
THANK YOU