Impact of Corporate Governance on Bangladesh Stock Market – Survey Findings

As my graduation internship report, I did a research to find out whether the market price of equities is sensitive to corporate governance or not. If the investors rely on fundamental analysis then corporate governance should affect equities’ price. A set of declarations and their impact on equities price were surveyed among a sample of 100 investors. This research didn’t focus on degree of impact of corporate governance on equities price. They survey findings are illustrated below.

Trading Experience

Trading Experience
51% of the respondents stated that they started investing in stock market less than one year ago. On the other hand 32% started between 1 to 3 year ago and 17% started more than 3 years ago. That shows that last year there was huge interest in investing in stock market.

Average Investment

Investment Amount
Average investment of the respondents is 445,760.50 and mode value is 200,000. These indicate tight portfolio of most of the investors. Tight portfolio is believed to have a more risk propensity as investors have little or no scope for diversifying portfolio or averaging price of a loosing stock.

Acceptable P/E Ratio for Buying

Acceptable PE Ratio for Buying
People have scattered idea about acceptable P/E ratio for buying any stock. 23% of respondents think that any stock is buy-able when P/E ratio is between 1 and 10. 41% of respondents were found more risky traders who choose P/E ratio between 11 and 20 as acceptable for buy decision. The most risk takers, 13% traders, stated that 21 to 30 range is good P/E ratio for their buy consideration. Other 22% do not have any idea regarding the relation between risk and P/E ratio. It can be assumed that most of the new investors who penetrated stock market in 2010 do not have good idea about stock market.

Acceptable P/E Ratio for Selling

When 13% stated that P/E ratio between 21 and 30 is preferable for buying, 29% also stated that range of P/E ratio is good for selling. That indicates that there is not much clear idea about P/E ratio and risk. Other 30% respondents have no idea about it. In total it can be concluded that there are not much consciousness regarding P/E ratio.

Acceptable PE ratio for sell consideration

Acceptable Price to NAV Ratio for Buying

33% of the respondents stated that ratio of Price and Net Asset Value (NAV) should be between 3 and 4 for buying that stock. Other 43% has no idea about NAV and its impact on equity price.

Acceptable Price - NAV ratio for buying consideration

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Kalpataru Biswas

I am a Marketing Manager specialized on digital media. I am experienced in Content, Search & Social Media Marketing as well as Digital Advertising. I have worked for eCommerce and IoT products. Analysis is the backbone of planning and executing. I am expert in Google Analytics, SQL, Access and Excel for making data driven decision.

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