Lack of confidence is a major crisis of the country's share market, said Dr M Khairul Hossain, chairman of Bangladesh Securities and Exchange Commission (BSEC).
At the same time, absence of trust in the companies' financial disclosures is creating a barrier to maintaining stability in the market, he added.
He was speaking at a seminar on "The role of financial reporting in the development of the capital market" at a city hotel on Tuesday organised by Bangladesh Merchant Bankers Association (BMBA).
Dr Mashiur Rahman, economic affairs adviser to the prime minister, was present at the seminar as chief guest while CQK Mustaq Ahmed, chairman of Financial Reporting Council (FRC), was present as special guest.
BSEC Chairman Khairul Hossain said that equity supply, confidence of banking sector and interest rate are related to the confidence in share market.
"If the interest rate goes down, liquidity supply to the capital market increases. But, we have to wait for a while to see the results," he added.
He also said many listed companies prepare flawed financial statements.
Besides, the managements of a number of listed companies manipulate net profits with an ill motive, he added. That is why many companies show deviations in their earnings per share between two quarters.
"We will arrange meetings with the managements of the companies to change their practices," said the BSEC chairman.
He expects a stable share market by the next one year.
Dr Mashiur Rahman said the audited financial statements and the regulatory system must be of international standard for keeping the confidence of foreign investors intact.
CQK Mustaq Ahmed said, the transparency in financial statements is connected to the revenue earning of the state alongside the interest of the stock investors.
He further said that they have also found evidence of irregularities against a number of big audit firms.
"We have already requested their regulatory authority to take action against the audit firms. If necessary, the FRC itself will also take action against the guilty organisations," he added.
BMBA President Md Sayedur Rahman presided over the seminar while the association's executive committee member Mir Mahfuzur Rahman presented the keynote paper.