Revaluation of Fixed Assets Before IPO: A Study on Textile Industry in Bangladesh
Journal of Finance and Accounting
Volume 5, Issue 5, September 2017, Pages: 200-205
Received: Sep. 12, 2017; Accepted: Sep. 23, 2017; Published: Nov. 2, 2017
Views 2759      Downloads 182
Md. Tahidur Rahman, Department of Business Administration, EXIM Bank Agricultural University Bangladesh, Chapainawabganj, Bangladesh
Article Tools
Follow on us
The textile and clothing sector of Bangladesh contributes more than 81 percent of foreign exchange earnings of the country. Considering the number of companies listed on the Dhaka Stock Exchange (DSE), textile was the second largest sector having 44 companies after insurance. Around fifty percent companies of the sector became listed on the DSE through Initial Public Offerings (IPO) during the period of January 2010 to March 2016. The study, based on prospectus data, intended to explore the practice of pre-IPO revaluation of fixed assets by textile industry in Bangladesh. Related objective of this study was to find out the factor(s) that influence(s) the growth of revaluation amount. Among the years under study, the highest number of textile companies became listed on DSE during 2014 and 2015 that accounted for about 55 percent growth of the sector. In the midst of controversies and doubts about the application and fairness of asset revaluation practice, a large number of textile companies in Bangladesh have been found revaluing their fixed asset as an option outlined in IAS 16. Thanks to the revaluation of fixed asset, average Net Asset Value (NAV) of textile companies raised from BDT 16.95 per share to BDT 28.54 per share with an increase of 68.38 percent. The study has observed an average increase in the value of fixed assets by 42 percent with a minimum of 4 percent and a maximum of 130 percent. Intensity of fixed assets has been found to have significant negative influence on the growth of fixed assets. This implies that textile companies which have low percentage of fixed assets on total asset observed hefty growth of fixed asset after revaluation. It is expected that the outcomes of the study will be useful to regulators, investors, financial analysts, and academics. Reporting of fixed assets in current market prices would assist investors and others make unbiased predictions about firms’ future performance. However, the condition is that asset revaluation should be made with utmost fairness and transparency.
Asset Revaluation, Textile Industry, IPO Companies in Bangladesh
To cite this article
Md. Tahidur Rahman, Revaluation of Fixed Assets Before IPO: A Study on Textile Industry in Bangladesh, Journal of Finance and Accounting. Vol. 5, No. 5, 2017, pp. 200-205. doi: 10.11648/j.jfa.20170505.14
Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Brown, Philip, H. Y. Izan, and Alfred L. Loh. "Fixed Asset Revaluation and Managerial Incentives." ABACUS 28, no. 1 (1992): 36–57.
Barac, Zeljana Aljinovic, and Slavko Sodan. "Motives for Asset Revaluatioin Policy Choice in Croatia." Croatian Operational Research Review (CRORR) 2 (2011): 60–70.
Zakaria, Adam, David John Edwards, Gary David Holt, and Vijay Ramchandran. "A Review of Property, Plant and Equipment Asset Revaluation Decision Making in Indonesia: Development of a Conceptual Model." Mindanao Journal of Science and Technology 12 (2014): 109–28.
Seng, Dyna, and Jiahua Su. "Asset Devaluations: The Motivation behind Management Decisions Evidence from New Zealand Firms." International Journal of Business Strategy 11, no. 2 (2011): 67–76.
Easton, Peter D., Peter H. Eddey, and Treveo S. Harris. "An Investigation of Revaluation of Tangible Long-lived Assets." Journal of accounting Research 31 (1993): 1–18.
IASB. "International accounting standard No. 16: Property, Plant, and Equipment." International Accounting Standards Board, 2005.
BGMEA. Story: BGMEA. 2016. (accessed February 27, 2016).
BKMEA. Knitware Industry: BKMEA. 2016. (accessed February 27, 2016).
Khaled, Khondokor Ibrahim. Share Market Inquiry Committee, 2011. Dhaka: Ministry of Finance, Government of the Peoples’ Republic of Bangladesh, 2011, 139.
Herrmann, Don, Shahrokh M. Saudagaran, and Wayne B. Thomas. "The Quality of Fair Value Measurement for Property, Plant and Equipment." Accounting Forum 30 (2005): 43–59.
Cotter, Jullie, and Ian Zimmer. "Asset Revaluation and Assessment of Borrowing Capacity." ABACUS 31, no. 1 (1995): 136–151.
Abody, David, Mary E. Barth, and Ron Kasznik. "Revaluation of Fixed Assets and Future Firm Performance: Evidence from the UK." Journal of Accounting and Economics 26 (1999): 147–71.
Missonier-Piera, Franck. "Motives for Fixed-asset Revaluation: An Empirical Analysis with Swiss Data." The Internatiional Journal of Accounting 42 (2007): 186–205.
Cheng, C. S. Agens, and Stephen W. J. Lin. "When Do Firms Revalue Their Assets Upwards? Evidence from the UK." International Journal of Accounting and Information Management 17, no. 2 (1999): 166–88.
Iatridis, George Emmanuel, and George Kilirgiotis. "Incentives for Fixed Asset Revaluations: The UK Evidence." Journal of Applied Accounting Research 13, no. 1 (2012): 5–20.
Christensen, Hans B., and Valeri V. Nikolaev. "Does Fair Value Accounting for Non-financial Assets Pass the Market Test?" Rev Account Stud 18, no. 3 (2013): 734–75.
Tabari, Naser Yadollahzadeh, and Marzieh Adi. "Factors Affecting the Decision to Revaluation of Assets in Listed Companies of Tehran Stock Exchange(TSE)." International Journal of Scientific Management and Development 2, no. 8 (2014): 373–77.
Razzaque, Rushdi Md. Rezaur, Muhammad Zahedur Rahman, and Amirus Salat. "Earnings Management: An Analysis on Textile Sector of Bangladesh." The Cost and Management 34, no. 5 (September-October 2006): 5-13.
Alam, Syed Golam Sirajul. "Recent Trends in Capital Market of Bangladesh: Critical Evaluation of Regulation." Asian Institute of Technology, 2012. 22.
Hasan, Md Shamimul, Rashidah Abdul Rahman, and Syed Zabid Hossain. "Corporate Accruals Practices of Listed Companies in Bangladesh." European Journal of Economics and Management 1, no. 1 (2014): 17–46.
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
Tel: (001)347-983-5186