Research Article Open Access

Compliance with accounting practices of SMEs in transitional economies: Evidence from Bangladesh

Abstract

Purpose: The purpose of the study is to examine the accounting statement prepared and maintained by the SME firms in Bangladesh and to find out financing difficulties of SMEs due to Information asymmetry. Methodology/Design: A conceptual model was molded and a random sample survey of 385 SMEs’ owner or manager was conducted from entire SME population. Findings: 47.79 percent, 33.25 percent and 18.96 percent SME firms are working in trade, manufacturing and service sector respectively. Among the 34.26 percent SME firms maintained all financial record, 58.44, 13.51 and 31.17 percent firms maintain their accounting record through manual, excel and software package respectively. Only 4.68 percent SME firms’ financial record maintains by professional accountant. Financial information has positive influence on accessibility to bank credit. Practical implications: The research will be helpful in filling the research gap and will give a great contribution to the policy makers to find out the limited access to bank loan by the SME firm. Originality/Value: The research paper uses detached approach from the previous studies with large sample and Ramsey’s Tests for Model Specification Error to rummage the SME in different ways.

 Raj Kumar Moulick