http://reposit.library.du.ac.bd:8080/xmlui/xmlui/handle/123456789/173 2026-08-25T06:12:45Z http://reposit.library.du.ac.bd:8080/xmlui/xmlui/handle/123456789/4874 Family Business Ownership, Corporate Governance and Firm Performance in Bangladesh Islam, Md. Saiful Corporate governance is a crucial issue in achieving the corporate wealth maximization objective of the corporation. With the changes in the business environment through globalization, stakeholders are more concerned and demanding more clearly and reliably accounts, neutral behaviors, safeguards, and a clear view of the company’s progress. It is observed that as long as wealth maximization responsibilities are assigned mainly to investors holding stock companies, every country faces the challenge of how to minimize the cost of equity to a reasonable level. Besides, the ownership structures around the world reflect differences in several countries based on the theoretical development and financial environments. Available literature suggests that the ownership control mechanism is one of the most debated issues in corporate governance activities. However, different procedures have been used to categorize firms by control type. Furthermore, as the stock possession has become more delicate over time and with the size of the company, the amount of stock required for active control may decrease. The available literature documented that the extent to which family members continue to exercise control in the boardroom varies widely as their ownership of the firm decreases (Mace, 1971). However, there is an overall consensus that the concept of control envisions the ability to choose the board of directors for the corporations, either by voting power inherent in stock ownership or by position control attained by the organization when there is extensive diffusion of stock ownership. Different decision criteria for categorizing firms have resulted from changes in the amount of ownership required for control, shifts in ownership structures and board configurations among firms, and changes in the perceived control advantage over time. The fractions of the board of directors who perform and the extent to which ownerships are dispersed to ii different clusters have also been examined as elements of corporate control and governance devices. With the above background in mind, this thesis examines the relationship among family ownership, corporate governance practices, and firm performance within publicly listed companies in Bangladesh from 2015 to 2024. With structural changes in guidelines and principles in both domestic and international arenas, there have been numerous aspects to be addressed for CG practices and firm performance. This study, entrenched in CG theories such as agency theory, stewardship theory, stakeholder theory, institutional theory, and resource dependency theory, investigates the impact of family business characteristics and governance mechanisms on financial performance, assessed through return on assets (ROA), return on equity (ROE), and net worth (NW). Chapter two of this thesis provides an extensive literature review on family ownership, corporate governance practices, and firm performance across various international and domestic contexts, illustrating the diversity of methodologies and findings. Existing literature suggests that an in-depth examination of both earlier and recent studies focusing on the concentration of family ownership, the role of corporate governance, and how these factors are linked to a firm's financial performance is needed. Family-owned businesses make-up a significant portion of the global economy, as revealed in different studies and research. For example, Anderson and Reeb (2003) noted that over one-third of S&P 500 firms are family-owned. In 2018, a Global survey on Family Business by PwC (Price Waterhouse Coopers), London, UK, highlighted that the concentration of family ownership has a strong presence, with 64% of Indonesian businesses falling into this category. The way family firms are governed plays a crucial role in their success, often differing considerably from non-family enterprises. Globally, over two-thirds of iii businesses are family-owned, and their importance is increasingly acknowledged (London Economics, 2002). Jensen and Meckling’s (1976) ownership structure theory suggests that there is a positive association between managerial rights and firm worth. Supporting this view, studies by McConaughey et al. (1998) and Barontini and Caprio (2004) also find that control of the family firm is positively associated with firm efficiency, suggesting that higher levels of family ownership can enhance business outcomes. Anderson and Reeb (2003) and Miller et al. (2007) showed that family ownership may have a significant effect on business success. McConaughey et al. (1998) and Barontini and Caprio (2004) also find that control of the family firm is positively associated with firm efficiency, suggesting that higher levels of family ownership can enhance business outcomes. The earlier studies on Japanese family businesses (Yoshikawa, T. et al., 2010; Morikawa, M., 2013; Arikawa et al., 2019; Koji et al., 2020) have found consistent results with the parameters indicated above. The literature presents mixed findings: Pindado and Requejo (2015) identify a positive link, other studies—such as those by Fauzi and Locke (2012) and Wang and Shailer (2015)—report adverse outcomes in developing countries. Similarly, some scholars (Young et al., 2008; Miah, M.S., et al., 2023) argue that listed family firms do not outperform non-family counterparts, while others (Chahal & Sharma, 2020; Koji, K. et al., 2020) suggest that family involvement enhances firm value. Alves and Gama (2020) further contend that family influence on firm success is complex and cannot be labeled as positive or negative. Chapter Three of this thesis provides the concept regarding the institutional environment of corporate governance with its systems and practices, nature and style of the family firm that exists around the world and in Bangladesh. It also provides a detailed sketch of the iv financial ecosystem and the pattern of market governance, along with its performance in Bangladesh. Financial market structure includes the formal, informal, and semi-informal financial sectors of Bangladesh. It also encompasses the money market, capital market, forex market, and the regulators-Bangladesh Bank (BB), Bangladesh Securities and Exchange Commission (BSEC), Micro-Credit Regulatory Authority (MRA), and Insurance Development Regulatory Authority (IDRA) of the financial market of Bangladesh. Under the money market infrastructure, bank- like- State-owned Commercial Banks (SCBs), Private Commercial Banks (PCBs), Specialized Banks (SBs), Foreign Commercial Banks (FCBs), etc., non-bank financial institutions (NBFIs)-like- House Building Finance Corporation (HBFC), Bangladesh Development Bank Limited (BDBL), Palli Karma-Sahayak Foundation (PKSF), Grameen Bank (GB), etc., micro-financial institutions (MFIs), and leasing companies are noted. Similarly, under the capital market, stock exchanges – like; Dhaka Stock Exchange PLC (DSE) and Chittagong Stock Exchange PLC (CSE), the depository- Central Depository Bangladesh Limited (CDBL), merchant banks (MBs), asset management companies (AMCs), stock- brokers, stockdealers, venture capital, etc., are also discussed broadly. It is observed that as of fiscal year 2024, 61 scheduled banks and 5 non-scheduled banks were operating in the country. The aggregate ROA & ROE showed significant variability over the years, with ROA remaining slightly above 0%. Generally, below 1% in most years from 2012 to 2024, and the aggregate ROE rate began at approximately 8% in 2012, reached a peak of about 11–12% 2013, 2015, and 2017. The Amount of Non-performing Loans (NPLs) by major types of banks rose from 501.6 billion to 2113.91 billion from 2014 to the end of June 2024. The highest DSE index was 7329.00 in 2021, and the lowest was 4898.52in 2024. The highest-ranking aggregate market cap of DSE was 45.20 billion v in 2023, and the lowest was 2.54 billion in 2008. The market capitalization (Market cap)- to-Gross Domestic Product (GDP) ratio peaked at 50% in 2010, before the crash, and dropped to its lowest point at 4.2% in June 2006. Chapter four of the thesis has focused on the adopted research methods for this study and the reasons behind such selection. This chapter has also shed light on the conceptual framework employed to understand the relationship between family ownership and firmlevel profitability. Positivism was the guiding philosophy of the study. Secondary data collected from the books of account and the equity market could be taken at face value, and the insights stemming from these data points can perfectly represent the research area of interest. Choosing 'positivism' as the guiding philosophy is considered a mainstream paradigm in corporate finance research. While conducting the research, a deductive research approach was followed, whereby null hypotheses were constructed and tested. Determinants of firmlevel performance have already been well-identified in the empirical papers. So, as per the established literature, this research phenomenon is well-documented. It was empirical research; the established theory was tested in the context of Bangladesh. This study employed a gamut of quantitative research tools, which is consistent with the positivist philosophy. It is a multi-method quantitative study that encompassed correlation analysis, regression analysis, and other statistical methods. This research is based on archival research. The data collection is based on an in-house constructed Excel template. Secondary data was used for this research. The data was collected from annual reports of the listed firms of the Dhaka Stock Exchange PLC. As per the current regulations, annual reports are available in the public domain; there is no need to seek prior permission. Likewise, macroeconomic data were downloaded from the vi Bangladesh Bank and the Bangladesh Statistical Bureau websites. Again, this information is also available in the public domain and freely downloadable. One hundred four (104) firms representing both the financial and manufacturing sectors were included in the final sample. These firms were chosen based on convenience sampling. In order to manage 'survivorship bias’, newly listed and relatively young enterprises were eliminated from the sample. Companies that had been listed before 2015 and had been in continuous operation during the whole research period were taken into account. ‘Financial performance’, ‘Family ownership’ and ‘Corporate governance' were used as dependent variables, key independent variables and key moderating variables, respectively. Firms were classified as family businesses if the founder is in charge, or if family members hold important executive positions, or if family members are among the top ten shareholders, or if at least 50% of the board is made up of family members, or if a privately held family business retains ownership. The dependent variable - financial performance was measured using three primary metrics: net worth (NW), return on equity (ROE), and return on assets (ROA). The level of 'corporate governance' was measured through standard parameters such as board size, board independence, and board committees. The study has employed a multiple linear regression model in order to understand the relationship between family ownership and financial performance. Regression parameters can be estimated using different frameworks – the OLS (Ordinary Least Squares) framework, the MLE (Maximum Likelihood Estimation) framework, and the GMM (Generalized Method of Moments) framework. In this study, the researcher used the ordinary least squares technique to estimate the regression parameters. Since the research time frame covered a period of 10 years [2015-2024], in order to understand the nature of vii causality, panel regression was used. The baseline model was a fixed effects one, as suggested by the Hausman test. The researcher has reported the pooled OLS, Randomeffects, and panel corrected standard error model results, as well as the baseline research. Endogeneity concerns in the estimated effects were mitigated through the omitted variable channel. A gamut of tests for robustness was also run to assess the validity of the estimated effects in different contexts. Chapter -5 deals with the empirical analysis of the dissertation. It at first presented the descriptive statistics of the research variables, followed by a correlation matrix. For most of the research variables, the range is substantial, indicating a wide cross-sectional variation. The correlation between ‘Ownership Concentration’ and ‘ROA’ is weakly positive; on a similar line, the correlation between ‘Ownership Concentration’ and ‘ROE’ is also positive. By employing statistical tools like the Condition index and VIF, probable multicollinearity concerns were identified. It was revealed through these tests that multicollinearity did not pose any significant concern in this database. Likewise, probable outlier concerns were identified through standard tests like Cook's distance, COV ratio, and hat matrix. It was found that the outlier did not pose any significant concern in this database. By employing statistical tools like the White test, B-P test, and graphical technique, probable heterogeneity concerns were identified. It was revealed through these tests that the error variance is not constant. This problem was later mitigated by using robust standard errors while estimating coefficients. By summarizing the key conclusions of the A-D test and JB tests, and by graphically plotting the errors, it was concluded that the errors are not normally distributed. So, the researcher tried to estimate consistently by using a bigger sample size. Pesaran CD test indicated that there exists significant cross-sectional viii dependence in the data. Likewise, it was evident from the Lagrange multiplier test that there is statistically significant heteroskedasticity in the panel data model. There was robust statistical evidence to suggest that the random effects model is inconsistent. Therefore, the fixed effects model was the preferred specification for the panel regression model. The positive coefficient suggests that family firms tend to have superior performance compared to non-family firms. However, the effect is not statistically different from zero. As per the panel corrected standard error model, the beta coefficient concerning family ownership is positive and statistically significant. This suggests that family firms tend to have higher return on assets compared to non-family firms, holding other variables constant. The coefficients for Ownership Concentration, Age, Total Assets, and Board Committee are statistically significant. On a similar note, the beta coefficient concerning family ownership is positive and statistically significant as per the pooled OLS model. Before running the regression models, the preconditions were met. Moreover, the pre-conditions were as follows: the anticipated association between the factor and the independent variable was linear; data were gathered by random sampling; covariance between independent variables and the error term was zero; and there was no perfect multicollinearity among the pairs of independent variables. Endogeneity is a key statistical concern in regression analysis, which can lead to biased and inconsistent estimates. Three models were run to check whether the inclusion of initially omitted variables in the regression changed the results. In the 1st model, the GDP growth rate variable was added with the pre-specified set of control variables. Model 2 included all the standard firm-level controls along with the inflation variable. The baseline effects remained unperturbed when omitted variables were introduced in the model. Robustness of the model was evaluated by using winsorized data and alternative ix definitions of the dependent variable. The baseline effects remained unperturbed in these tests of robustness. Finally, the existence of cross-sectional heterogeneity was checked out. The hypothesized positive relationship between firm performance and family ownership concentration is supported in the cross-sectional regression, but the magnitude of the regression coefficient changes in the small-in-large firm case and the mature-in-young firm case. In a nutshell, the estimated effects demonstrated cross-sectional heterogeneity. In conclusion, this thesis documents the understanding of how family ownership, agency conflicts, and corporate governance interact to influence firm performance in Bangladeshi firms, using the model employed in the study. Moreover, the findings of the study indicate diverse results for family business ownership and corporate governance issues. It is argued that greater board independence, better regulatory execution, and increased transparency are critical for addressing agency problems and enhancing corporate performance. This thesis is submitted for the degree of Doctor of Philosophy. 2026-08-06T00:00:00Z http://reposit.library.du.ac.bd:8080/xmlui/xmlui/handle/123456789/4859 Essays of Three Fundamental Biases in Behavioral Finance from the Capital Market of Bangladesh Haque, Muhammad Enamul The thesis empirically investigates three essays on core behavioral biases such as the disposition effect, overconfidence bias, and herding behavior within the framework of frontier equity markets like Bangladesh across distinct market states: bearish, bullish, crisis, extended crisis, and COVID-19. The developed and emerging equity markets extensively reported the evidence of biases in investor decision-making, but behavioral finance research in frontier markets remain underdeveloped and underexplored. By addressing this gap, the thesis systematically examined these three biases, applying econometric and advanced machine learning tools. The first essay of the thesis empirically investigates whether investors have the inclination to realize the stock gains promptly rather than holding on to the stock that has declined in value under different market conditions in the Bangladesh equity market. The analysis estimates the disposition coefficients with the evaluation of the responsiveness of the current market trading volume to lagged market index prices. The findings indicate strong and ubiquitous effects of the disposition effect in the overall market and in all other markets conditions except for bearish periods. It is quite remarkable that the strength of the behavior increases in times of crisis and prolonged periods of crisis, thereby indicating that the loss aversion behavior of investors continues to increase under greater uncertainty. The results are an extension of the knowledge on behavioral trading patterns in frontier markets as they show that the disposition effect is time-varying and state-dependent. The study, therefore, adds new information on the influence of emotional and cognitive bias in the responses to the trading volume in various market setups. The second essay discusses the nature, severity, and dynamics of herding behavior in a Bangladesh stock market in both different market states and situations. Based on the Cross-Sectional Standard Deviation (CSSD) model and Cross-Sectional Absolute Deviation (CSAD) model developed by Christie and Huang (1995) and Chang et al. (2000), respectively, in addition to a quantile regression framework, the study offers a complete picture of the investor herding concept with different market regimes. The findings demonstrate that the herding behavior in Bangladesh is widespread but also state-specific where the bearish and the protracted crisis periods depict the most prominent state-dependent herding behavior, especially in the extreme down markets. The fact that asymmetric herding happens in the high-volatility and high-trading-volume conditions supports the sensitivity of the CSSD model to explain the extreme collective movements as compared to the CSAD approach. The analysis at the industry level also shows that the herding behavior is not evenly distributed but rather concentrated in certain sectors during the periods of market stress. In addition, macroeconomic variables and monetary policy instruments have been found to have a considerable effect on herding, particularly in bearish environment, and in crisis environment. In general, the results contribute to the behavioral finance literature since they reveal the contingency of state-based, asymmetric, and policy-dependent herding behavior in frontier market setting. The third essay explores the expression and behavior of investor overconfidence in Bangladesh stock market with a special focus on how it has been changing under different market states. The vi problem of overconfidence investors overestimating their ability to predict and trading too much due to the existing returns is investigated using a combined framework comprised of Vector Autoregressive (VAR), Transfer Entropy (TE), and Long Short-term Memory (LSTM) models. The analysis of the total and unexpected elements of market returns during bullish, bearish, crisis, extended crisis, and COVID-19 periods unveils that the behavioral phenomenon of overconfidence is persistent and clearly state-dependent. One of the main discoveries is a new type of behavior, which is called defensive overconfidence: when the market is under intense stress, especially in equity market downturn, investors still show overconfident behavior, yet their behavior corresponds to defensive responses to uncertainty, instead of optimism of making future gains. The analysis at the industry level also proves the prevalence of this bias in all major and dominant industries. Overall, the findings are expected to make contributions to the behavioral finance literature by adding a new conceptual dimension to the notion of overconfidence, as well as evidencing the applicability of hybrid econometric-machine learning paradigms in order to capture the non-linear and adaptive nature of investor psychology in frontier markets. This thesis is submitted for the degree of Doctor of Philosophy. 2026-08-04T00:00:00Z http://reposit.library.du.ac.bd:8080/xmlui/xmlui/handle/123456789/4772 The Role of Agency Relationship on Firms’ Financial Behaviour: An Empirical Study on the Listed Manufacturing Companies of Bangladesh Tani, Samia Sultana This thesis is submitted for the degree of Doctor of Philosophy. 2025-02-19T00:00:00Z http://reposit.library.du.ac.bd:8080/xmlui/xmlui/handle/123456789/4746 REAL ESTATE MARKET OF BANGLADESH: COMPETITIVENESS AND CONCENTRATION KHAN, ZARIN MARZAN The real estate industry holds a significant position in the economy of Bangladesh. Its contribution to the country's GDP and employment generation is noteworthy. The development of the real estate sector positively impacts various other industries, such as design, construction, banking, and finance. The sector also plays a crucial role in attracting foreign investment to the country. However, unconstrained expansion is causing environmental concerns. Our goal is to analyze the real estate market's competitiveness, identify hurdles, and determine issues affecting the market. A competitive market creates competition among businesses to gain customers, reduce production costs, and determine pricing structure and product quantity. The real estate market is unique and differs from other markets in several aspects. Achieving perfect competition in this market is complex. The real estate market has distinct economic features where price is influenced by various factors, including government intervention, local rules, and land supply. In Bangladesh, area-based fixed prices have been set for land to prevent price bubbles, but price ceilings do not control the selling price, leading to untaxed income and revenue loss. Demand for properties and their geographical location significantly affect construction costs and property value. The availability of common facilities in the locality also significantly influences people's preference and demand for a property. The high price of properties in central business districts often turns them into Veblen goods and attracts the elite class as investment options for their untaxed money. Thus, we have researched Bangladesh's real estate market using mixed methods, including questionnaires and qualitative data analysis. In developing the questionnaire, we have considered companies operating across Bangladesh with a reputable presence in the market, all of which are members of REHAB and possess the necessary project permits. Our efforts to consider various locations revealed that the majority of preferred areas are centered around Dhaka and its environs. Real estate housing concepts have yet to gain widespread traction in local towns. While other major metropolitan areas have entered the real estate market, customer preferences still heavily favor Dhaka, with the city exhibiting a distinct concentration among the regions. The questionnaire has two parts, one focused on customer preferences and the other on entrepreneurs' and real estate professionals' opinions. We have collected authentic data from v reliable customers and representatives of reputable companies at the REHAB Winter Fair 2021. We also reviewed secondary data from various sources to ensure accuracy and relevance. Autonomous demand is the demand for a product that is not influenced by the demand for other products. In Bangladesh, real estate housing is an example of autonomous demand. An increase in autonomous expenditures leads to an equivalent increase in market share and output. Moreover, the preference for certain areas and companies contributes to a concentrated market, thereby offering companies a greater market share. where an increase in demand for a particular company's assets results in an increased market share for that company. The Herfindahl-Hirschman Index is used to measure the concentration ratio of the market. An HHI of less than 1,000 is a competitive market, 1,000 to 1,800 is moderately concentrated, and an HHI of 1,800 to 10,000 is a highly concentrated marketplace. The results of the research suggest a relatively competitive market for flats but an oligopoly market for plots, with a concentration of 1292.16 for the area and 1113.51 for companies in the plot market. On the other hand, the concentration for the area is 799.77, and for the company, it is 772.29 in the flat market. Further logistic regression analysis using the odd ratio reveals no specific concentration has been observed for the preferred area or company for both flats and plot markets. The factors that influence the markets have distinct effects on customer preferences, thereby shaping their choices. We have identified significant factors and their impact on market decisions from both customer and supplier standpoints. The valuation provides valuable insights into the current market structure and underlying reasons. The appeal of a particular property to potential buyers is often influenced by a set of factors that are common in both plot and flat markets. Established market leaders typically exert significant influence over these factors. The factors that commonly attract buyers to a specific property, both in plot and flat markets, include the location of the property, reasonable price, brand value of the company, and company rules. Dominant companies in the real estate market often strongly influence these factors, impacting buyer preferences and decisions. There are some distinct factors in the case of plots and flats, which are completely market-specified, whereas large companies have expertise in providing such facilities. Those include improved road systems, urban facilities, easy payment system, future plans of government, goodwill of the company, and individual trust on the company for the plot market and building fittings, modern vi design, extra facilities provided by the specific company, fast handover exclusively subjective for the flat market. We have assessed supporting entities' significance in real estate developers' operations, business, and market strategy using the Likert Scale. The real estate industry has expressed dissatisfaction with the services provided by both government and private entities, citing inadequate support for the needs of real estate developers. There is a prevailing sentiment that the performance of these entities is subpar, falling short of fully satisfying the industry's requirements. Industry stakeholders often use their market power to create barriers preventing new entrants from competing effectively. This manipulation of the industry landscape allows established players to maintain their advantage and stifle competition. Our key research question unequivocally centered on evaluating the competitiveness and concentration of the real estate market in Bangladesh. We have successfully identified a definitive answer to this critical inquiry. This thesis is submitted for the degree of Doctor of Philosophy. 2025-11-05T00:00:00Z