Transparency and disclosure (TD) and valuation of Indian banks

Shailesh Rastogi () and Bhakti Agarwal ()
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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

Bank i Kredyt, 2023, vol. 54, issue 5, 519-540

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.

Keywords: transparency; disclosures; banking; non-performing assets; valuation (search for similar items in EconPapers)
JEL-codes: C23 G21 G32 G34 (search for similar items in EconPapers)
Date: 2023
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