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Transparency and disclosure (TD) and valuation of Indian banks

Author

Listed:
  • Shailesh Rastogi

    (Symbiosis Institute of Business Management, Pune; Symbiosis International (Deemed University), Pune)

  • Bhakti Agarwal

    (Symbiosis Institute of Business Management, Pune; Symbiosis International (Deemed) University; corresponding)

Abstract

The study’s main goal is to determine how TD affects bank valuation while operating performance measures are held constant. The study uses panel data regression as its approach. Panel data from 34 banks are collected for six years (2016–2021). The econometric model is specified to determine the link of TD with the valuation of the banks. The other determinants of the value in the banks are controlled while estimating the model. Interestingly, the results endorse the apprehension raised in the study that TD’s influence on the bank’s valuation is significant despite controlling the operating performance. Such results are unique as it is not observed in any other study which discusses the impact of TD on the valuation of the banks. The main implication and recommendation of the study are: (1) the managers should exercise proper disclosures; (2) there should be regulation on both types of disclosures (mandatory and voluntary disclosures); and (3) provisions of pecuniary punitive action should be devised in case of digression from the regulation on disclosures as the gullible small investors are in the fray and may get misguided due to possible misleading disclosures by the banks.

Suggested Citation

  • Shailesh Rastogi & Bhakti Agarwal, 2023. "Transparency and disclosure (TD) and valuation of Indian banks," Bank i Kredyt, Narodowy Bank Polski, vol. 54(5), pages 519-540.
    • Handle: RePEc:nbp:nbpbik:v:54:y:2023:i:5:p:519-540
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    More about this item

    Keywords

    transparency ; disclosures; banking; non-performing assets; valuation;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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