Authors

1. Dr. Dilip Kumar Sen

Affiliation

• Professor of Accounting and Finance School of Business, Independent University Bangladesh (IUB)

Abstract

This paper is an outgrowth of a research study based on the analysis of data collected through a case study-based questionnaire administered to as many as 152 interviewees belonging to different groups in Bangladesh. The academics argue in the literature that economic evaluations, financing, and investment decisions, should be made based on an integrated view that encompasses the accounting, economic and financial aspects all together. While there is a wide agreement about this approach, it is not clear whether people really follow it in practice. The majority of the interviewees, in this Case Study, did not follow this approach in practice and as a consequence, wrong decisions were made. Such an investment behavior can cause distortions in economic resource allocations, inefficiencies, and environmental harms. A fruitful way to enhance the socio-economic growth in the country would be, therefore, to increase the investors’ awareness to this issue. It is not enough that people know and concur with the need for an integrated approach. Potential investors should also know how to do it. This paper pointed out several factors that were significant in explaining how this discrepancy between theory and practice can be reduced. There is a need to encourage investors to have a longer time-horizon; and to increase their business experience before they actually turn to investing. The compensation schemes of those who are involved in making investment decisions should be tied to the investment performance, to the extent possible. These actions will increase the efficiency of the market participants and stir the Bangladesh economy to the growth path, to realize its promising potential.

Keywords

Financial decision-making, Accounting Concepts, Socio-economic development, Integrated Approach and Case Study

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