Corporate communication forVietnamese listed firmsGreg Tower, Kelly Anh Vu and Glennda ScullySchool of Accounting, Curtin University, Perth, Australia

Abstract

Purpose The purpose of this paper is to investigate the impact of independent directors andownership structure on voluntary disclosures of Vietnamese listed firms.Design/methodology/approach Year-ending 2008 annual report disclosures of 45 Vietnameselisted firms are analyzed. Voluntary disclosure is measured using a Vietnamese Disclosure Indexadapted from prior literature. Descriptive and inferential statistics (T-test, analysis of variance,multiple regressions (ordinary least squares)) are employed to generate empirical insights.Findings The results indicate that the level of voluntary disclosure among Vietnamese listed firmsis relatively low (24.23 per cent). There are higher levels of disclosure relating to director and seniormanagement details but far lower in regards to social issues. State ownership and managerialownership are negatively and positively related to the extent of voluntary disclosure respectively.Moreover, bigger firms are found to be positively associated with voluntary disclosure.Research limitations/implications The results of this study are limited to one year 2008 andthus, could be biased as disclosures can change over time.Practical implications Vietnamese regulators should focus on strengthening the regulationsgoverning the level of corporate communication in firms with high state ownership as well asencouraging more disclosure of non-financial information to strengthen its market informationtransparency.Originality/value This study is one of the first examining the level of corporate voluntarydisclosure practices among Vietnamese listed firms. Evidence from this study extends the existingvoluntary disclosure literature on emerging economies whilst providing valuable insights toVietnamese policy makers in the process of developing and improving its financial reportingregulatory framework.

Keywords Vietnam, Corporate communications, Disclosure, Corporate ownership,Voluntary disclosure, Emerging markets, Agency theory, Ownership structure, State ownership

Paper type Research paper

1. IntroductionThis study investigates the changing face of Vietnam, specifically in relation to itscorporate reporting environment. Vietnam is an emerging economic power and isestimated to be the 17th largest economy in the world by 2025 (Wilson and Stupnytska,2007). Despite becoming a key player in the world economy, the Vietnamese economyis still relatively under-researched, particularly its accounting and finance aspects.Using a positivist empirical approach, this study examines the determinants of a keycontemporary reporting practice (i.e. voluntary disclosure) pertinent to Vietnameselisted firms. Precisely, two main aims are pursued:

(1) to assess the extent of voluntary corporate disclosure in the annual reportsof Vietnamese listed firms; and

(2) to explore the association between the extent of voluntary disclosure and itspossible determinants (i.e. corporate governance and three types of ownershipstructure: state ownership, managerial ownership and foreign ownership).

From 1975 to present day, Vietnam has undergone transformational change reflectingits rapid progressing towards a market-oriented economy from a centrally planned

The current issue and full text archive of this journal is available atwww.emeraldinsight.com/1321-7348.htm

Asian Review of AccountingVol. 19 No. 2, 2011

pp. 125-146r Emerald Group Publishing Limited

1321-7348DOI 10.1108/13217341111181069

125

Corporatecommunication

economy. Prior to 1975, there were two economic systems operating side byside in Vietnam. The capitalist free market economy of southern Vietnam and thecentralized state-planned economy of the north resulting in two official accountingsystems (Nguyen and Pham, 1997). The financial accounting system of southernVietnam based on French traditions that is reminiscent of capitalist free marketeconomies, whilst in the north; a cost accounting model of socialist countries (Chinaand Soviet Union) prevailed (Bui et al., 2011). After reunification in 1975, Vietnampursued a communist socialist path whereby the economy was built on a Sovietcentral-planning model. Under this regime, all business sectors were owned, controlledand managed by the state government; known as state-owned enterprises (SOEs).Constraints endemic to the centrally planned economy, however, led to a dwindlingof key resources that nearly culminated in the collapse of Vietnamese economy by theearly 1980s. In 1986, Vietnam launched an economic reform programme aimingat changing the state-controlled economy to a market-socialism economy, referredto as Doi Moi [1] (Truong et al., 2006). Following the implementation of aneconomic reform in 1986, Vietnam has progressed rapidly towards its market-orientedeconomy. The year 2000 marks a significant event for the Vietnamese economywith the creation of its first stock market Ho Chi Minh City Securities TradingCenter (HoSTC) originating with only two listed firms[2]. HoSTC was later upgradedto Ho Chi Minh Stock Exchange (HOSE) in August 2007 and is the largest stockexchange in Vietnam. The second stock market Hanoi Securities TradingCenter (Hanoi STC) was subsequently established in 2005 with lower capitalrequirements in order to facilitate more privatization of SOEs. Hanoi STC wasupgraded to Hanoi Stock Exchange (HXN) in January 2009. Since 2000, the VietnameseStock Exchange has not only been the main vehicle for ownership restructuringof SOEs but also plays an important role in its growing economy throughfacilitating the inflows of capital. From only two firms in 2000, by the end of 2008, therewere more than 300 listed firms (State Securities Commission of Vietnam, 2010;Duc, 2010).

Currently, the Vietnamese emerging capital market is facing several problemsincluding low transparency of information, inaccuracies of financial reports and weakshareholder protection. The World Bank (2006, p. 24) assessment of Vietnamesecorporate governance reports that there is not enough assurance that informationprepared and disclosed by enterprises adheres to VAS/IFRS because the lack of aneffective mechanism to monitor the quality of information, or more fundamentally,to monitor that information is prepared and disclosed at all. The Asian financialcrisis in 1997 and subsequent Enron collapse in 2000 suggest that low levels oftransparency (weak corporate disclosure) can cause enormous damages not only to thefirms but also affect the macro economy as a whole. Previous studies (Barako, 2004;Healy and Palepu, 2001; Armitage and Marston, 2008) indicate that informationdisclosure is an important strategy to the development of an emerging market asits sustainability relies heavily on reducing the gap of information asymmetry. Toimprove its capital market, Vietnam listed firms need to engage in informationdisclosure to improve the transparency of its market. Accordingly, the study ofinformation disclosure, specifically voluntary disclosure practice within theVietnamese context is essential and timely.

Drawing on the framework of agency theory and the characteristics of Vietnameseeconomy, this study utilizes the proportion of independent directors on board (a proxyfor corporate governance) and three common ownership identities in Vietnam (state,

126

ARA19,2

managerial and foreign ownership) to investigate the voluntary disclosure practicesof Vietnamese listed firms. The results of this study indicate that the proportion ofindependent directors and foreign ownership have no predictive impact on the levelof voluntary disclosure. On the other hand, consistent with hypotheses, stateownership influences negatively on voluntary disclosure practices while managerialownership influences positively. Moreover, bigger firms are found to be engaged inmore voluntary disclosure practices than smaller firms. The above evidence ofVietnamese voluntary disclosure practices contributes to the literature in severalimportant ways. First, the Vietnamese economy is under-researched; particularly,its accounting and finance aspects. Sarikas et al. (2009) call for more studies ofcontemporary Vietnamese accounting. Accordingly, this study reflects an extensionof the existing literature by providing insights into the financial reporting ofVietnamese listed firms and its corporate governance. Second, Garca-Meca andSanchez-Ballesta (2010) recommend more focus on the relationship between ownershipidentity and voluntary disclosure. A study of voluntary disclosure and its associationwith different ownership identities in Vietnam is important with its uniquecharacteristics of high level of state ownership in a transitional economy. Third,within the Vietnamese context, this study can assist policy makers by providingevidence supporting them formulating the Vietnamese corporate reportingregulations, improving its information asymmetry in order to enhance the marketsliquidity.

The paper is structured as follows. Section 2 documents the theoretical frameworkand reviews the relevant literature to postulate the hypotheses for this study. Section 3outlines the research design including data sample and the measurements of keyvariables. Section 4 presents the empirical results while the last section concludesthe study with the discussion of final results, implications and suggestions for thefuture research.

2. Literature review and hypotheses developmentThe framework of agency theory is employed to predict the determinants of voluntarydisclosure. Within the agency theory, there exists a relationship between the principalsand the agents. The principal(s)/agent(s) relationship identified by Jensen andMeckling (1976) is more relevant to those of developed western economies than adeveloping Asian environments. According to Lopez-de-Foronda et al. (2007), conflictsbetween managers and shareholders is common in Anglo-Saxon countries while inAsian countries, conflict of interests usually occurs between ownership concentrationand minority shareholders. The agency theory approach argues that a firms choice todisclose information is a function of managerial discretion to better solve the problemof information asymmetry. Empirically, some studies posit that disclosure choiceof a firm is significantly influenced by the strength of its corporate governancesystems and identity of its ownership ( Jiang and Habib, 2009; Chau and Gray, 2010;Eng and Mak, 2003; Ho, 2009). Specifically, corporate governance (i.e. presence ofindependent director) is implemented to improve the monitoring of managersbehaviours so that shareholders can protect themselves from frauds or diversions ofassets by the managers (Ho and Wong, 2001; Shleifer and Vishny, 1997). Furthermore,the choice of disclosure depends on different types of ownership structures as thestructure of ownership determines the level of monitoring and thereby the level ofdisclosure (Eng and Mak, 2003, p. 326). Prowse (1995) suggests that identities ofownership may have different monitoring skills, different incentive to monitor and

127

Corporatecommunication

different corporate objectives (Xiao and Yuan, 2007; Ho et al., 2008; Eng and Mak, 2003;Jiang and Habib, 2009).

Agency theory predicts that good corporate governance can strengthen themonitoring and control of the managers and thereby reduce the opportunisticbehaviours and lower the problem of information asymmetry (Fama and Jensen, 1983).According to Ho and Wong (2001), under such intensive monitoring environment of agood corporate governance practice, it is more difficult for managers to withhold anyinformation or disclose any false information. Therefore, having good corporategovernance promotes transparency and accountability of firms information; whichsubsequently has a positive impact on the level of voluntary disclosure. Consistentwith agency theory, this study predicts:

H1. A higher proportion of independent directors on board is positively associatedwith voluntary disclosure of Vietnamese listed firms.

Previous studies suggest that the presence of state ownership in a firm weakensincentives to disclose information. Jiang and Habib (2009) argue that the concentrationof state ownership results in no real separation of ownership and control. Since thestate can easily access firms insider information (Owusu-Ansah, 1998; Xiao and Yuan,2007), they are likely to be less dependent on information disclosure for decisionmaking, resulting in no real incentive for firms to provide extra information. Moreover,the presence of high state ownership may represent a lack of interest in companysprofits. Supporting this position, Xiao et al. (2004) assert that the state shareholdersoften seek social objectives such as maintaining social order and wealth distribution;rather than the firms efficiency or profit maximization. In addition, Jiang and Habib(2009) and Naser and Nuseibeh (2003) contend that firms with state ownershiphave less incentive to maximize profits because of guaranteed returns by thestate. Since firms can easily obtain additional funds, regardless of informationdisclosure, firms with state ownership have lesser incentives to disclose moreinformation. An investigation of the association between the Vietnamese stateownership and the level of voluntary disclosure makes a significant contributionto the literature of voluntary disclosure. In light of these agency theory-basedarguments, this study proposes as:

H2. State ownership is negatively associated with voluntary disclosure ofVietnamese listed firms.

According to Jensen and Meckling (1976) agency theory tenets, managerialownership alleviates agency costs because managers who own a fraction of a firmsshares have incentives to bear the consequences and gains from the rewards of thatfirm. Thus, a higher level of managerial ownership enables firms to align the incentivesof managers with shareholders and thereby motivates firms to voluntarily provideextra information. Consistent with this view, Nagar et al. (2003) find a positiverelationship between disclosure and long-term managerial wealth tied to shareprices. Similarly, lower managerial ownership may encourage managers to consumeperks that can be against the wealth maximization of shareholders (Eng and Mak,2003). Empirically, evidence from Mohd Ghazali and Weetman (2006) studyindicates that low managerial ownership is associated with low level of voluntarydisclosure among Malaysian listed firms. Jiang and Habib (2009) report that higher

128

ARA19,2

managerial ownership leads to increased voluntary disclosure practices inNew Zealand listed firms. Based on agency theory and previous evidence, this studydevelops as:

H3. Managerial ownership is positively associated with voluntary disclosure ofVietnamese listed firms.

Barako (2004) provides evidence suggesting that foreign ownership is a key variableexplaining the disclosure variance between listed firms in Kenya from 1992 to 2001.Previous research asserts that foreign shareholders face significant higher risk thanlocal shareholders. La Porta et al. (2000) identify the potential risk associated withforeign share trading such as political risk, information asymmetry and inadequatelegal protection. Bradbury (1992) argues that there is a greater need for disclosureas a mean of monitoring the actions of the management in foreign firms. This isbecause, due to separation of ownership and control geographically, foreignshareholders face considerably higher information asymmetry than localshareholders. In foreign-held firms, it is more difficult for foreign shareholders tocontrol managerial behaviour not only because of the geographical differences but alsothe barriers of language and culture (Bradbury, 1992; Xiao and Yuan, 2007; Craswelland Taylor, 1992). Xiao and Yuan (2007) further state that in emerging capital marketsuch as China, the information asymmetry problem is even higher because ofdifficulties in access of hard copy annual reports. As such, there is a greater need fordisclosure in firms with high level of foreign shareholders. (Bradbury, 1992; Meek et al.,1995). Prior studies such as Haniffa and Cooke (2002), Mangena and Tauringana (2007)and Wang et al. (2008) note a positive association between the proportion of sharesheld by foreign investors and the extent of voluntary disclosure of information inMalaysian, Zimbabwe and Chinese listed firms, respectively. Thus, the hypothesisto be tested is:

H4. Foreign ownership is positively associated with voluntary disclosure ofVietnamese listed firms.

Control variablesTo test the main hypotheses, this study includes two control variables (size and firmsprofit) in order to minimize cross-sectional variations. These control variables arereported in the literature to be associated with voluntary disclosure. For instance, sizehas often been reported as a significant explanatory variable in the previous studies ofcorporate disclosure. Hossain et al. (1995) note that agency costs increases with thefirm size. Considerable research that finds a significantly relationship between firmsize and the level of voluntary disclosure (Chow and Wong-Boren, 1987; Cooke, 1989,1992; Camfferman and Cooke, 2002; Raffournier, 1995; Leung and Horwitz, 2004; Wanget al., 2008; Xiao et al., 2004). This study focuses on the most common size variablethat have been used extensively in previous research; that is the natural logarithm oftotal assets of the firms to eliminate skewness in the data (Hossain et al., 1995).Moreover, agency theory suggests that managers of very profitable firms may utilizeexternal financial reporting information as a tool to obtain their personal advantagessuch as remuneration, promotions or bonuses (Singhvi and Desai, 1971; Wallace andNaser, 1995; Inchausti, 1997) and to maximize shareholders values and to attractadditional capital (Grossman and Hart, 1980). Moreover, Ng and Koh (1994) posit that

129

Corporatecommunication

there are more public scrutiny to more profitable firms and thus, these firms are likelyto engage in self-regulation mechanism such as enhancing corporate disclosure toavoid future external regulation. Empirically, Haniffa and Cooke (2002), Mangenaand Tauringana (2007) find significant associations between firms corporatedisclosure and its profitability. This study uses return on asset (ROA) as ameasurement for the firms profit (Ho and Wong, 2001; Camfferman and Cooke, 2002;Chau and Gray, 2002). Definitions of control variables are outlined in Appendix 3.

3. Research designSample selectionThis exploratory study provides a one-year cross-sectional analysis with a randomselection sample of 45 listed firms [3] in the financial year ending 31 December 2008. Atthe time of this study, this represents the latest data available. The annual reports areretrieved from the two Vietnamese stock exchange web sites: Ho Chi Minh and Hanoistock exchange. Appendix 1 presents the final sample selection procedures.

Dependent variable voluntary disclosure indexCooke and Wallace (1989, p. 51) state that financial disclosure is an abstractconcept that cannot be measured directly. However, they argue that a disclosure indexcan be used to understand the extent of information communicated by the firms.Consistent with previous studies in emerging capital markets (Haniffa and Cooke, 2002;Barako, 2004; Xiao and Yuan, 2007; Ho, 2009; Akhtaruddin et al., 2009), this studyutilizes a disclosure index to measure the level of voluntary disclosure practicesin Vietnam.

The selection criteria for choosing the items of Vietnamese voluntary disclosureare as follows. First, to be included in the disclosure index, an item needs to have beenmentioned in more than one of the prior key studies, which are Meek et al. (1995);Ferguson et al. (2002); Haniffa and Cooke (2002); Xiao and Yuan (2007); Ho (2009);Akhtaruddin et al. (2009) and Wang et al. (2008). This method of selection is consistentwith previous studies (Hossain et al., 1994, 1995; Barako, 2004; Alsaeed, 2005; Xiao andYuan, 2007; Wang et al., 2008; Ho, 2009). As a result, an initial list of 119 items iscreated. Second, this list is then critically revised by the Vietnamese accountingexperts[4] to verify the relevance of each item to Vietnamese reporting environmentand to eliminate any reporting items that are of mandatory nature. Last, this detailedprocess result in a final list of 84 items to capture the specific Vietnamese corporatedisclosure practices[5]. The 84 items of Vietnamese voluntary disclosure index (VnDI)is presented in Appendix 2.

In measuring the voluntary disclosure index, previous literature utilize bothweighted (Buzby, 1975; Eng and Mak, 2003; Chow and Wong-Boren, 1987; Barako,2004) and unweighted approaches (Meek et al., 1995; Leventis and Weetman, 2004;Inchausti, 1997; Akhtaruddin et al., 2009; Ho and Wong, 2001; Haniffa and Cooke, 2002;Cheng and Courtenay, 2006; Xiao and Yuan, 2007; Ho, 2009). This study employs amore objective approach whereby each item is equally weighted and expressed indichotomous form, where firm is given 1 for a disclosed item and 0 for otherwise. Thisunweighted approach is appropriate for several reasons. First, this study focuses on theextent of disclosure to all users and not any specific user and thus, each itemof information disclosed is assumed to be equally important for all users (Meek et al.,1995; Cooke, 1989). Using a weighted approach may reflect a bias towards specificgroups of users as different groups of users will view different items as important

130

ARA19,2

(Marston and Shrives, 1991). Second, prior studies of emerging capital markets(Chow and Wong-Boren, 1987; Barako, 2004) that use both weighted and unweightedmethods find no significant difference between the two approaches.

Following Meek et al. (1995), the final disclosure score is calculated as the totalscore divided by the total possible score of each firm to avoid firms being penalized fornon-disclosure of irrelevant items. The final VnDI, calculated for each firm, is asfollows:

VnDI i Xe

jIej=E

where VnDIi is the voluntary disclosure index for firm i; ej is voluntary disclosureitem j. Dummy variable to the value of 1 if the firm discloses information about thisitem, and dummy variable to the value of 0 if the firm does not disclose it. E is the totalpossible maximum number of items (84).

Model developmentMultiple regression analysis (ordinary least squares) is utilized as the primary methodto test the four hypotheses. This regression model tests the associations between thedependent variable of voluntary disclosure, the independent variables of corporategovernance and ownership identities (state ownership, managerial ownership andforeign ownership) and the control variables (size and profit). The following model isestimated (definitions of these variables are presented in Appendix 3):

VnDI i li b1CORPGOVi b2STATEi b3MANAGERIALib4FOREIGNi g1SIZEi g2PROFITi Zi

Independent variablesIn this study, the proportion of independent directors over the total directors of the firmis used as a proxy to measure corporate governance. The literature shows that this isthe most frequently used method for measuring the strength of corporate governance(Forker, 1992; Eng and Mak, 2003; Gul and Leung, 2004; Barako et al., 2006; Lim et al.,2007; Malone et al., 1993; Ajinkya et al., 2005; Lakhal, 2005; Chen and Jaggi, 2000;Cheng and Courtenay, 2006; Akhtaruddin et al., 2009). As in previous studies (Naseret al., 2002; Eng and Mak, 2003; Xiao and Yuan, 2007; Xiao et al., 2004; Wang et al.,2008), state ownership is determined by the percentage of shareholding owned by thestate. Managerial ownership is calculated by the percentage of shares held by board ofmanagers[6] over the total issued shares of the company (Eng and Mak, 2003; Leungand Horwitz, 2004; Xiao and Yuan, 2007). Consistent with majority of previous studiesin emerging capital markets (Haniffa and Cooke, 2002; Barako et al., 2006; Wang et al.,2008), in this study, foreign ownership is measured by the percentage of shareholdingheld by foreign investors. Appendix 3 presents the definition of all variables used inthis paper.

4. FindingsA summary of VnDI and its five subcategories information is presented in Table I.There is a wide range in the disclosure index within the sample with the highest score

131

Corporatecommunication

of 49.0 per cent and the lowest of 10.0 per cent with a mean of 24.23 per cent. Thehighest disclosure level is for Director and Senior Management information (mean of51.85 per cent) and the lowest is Social Reporting information (12.59 per cent). Theaverage of voluntary disclosure index, in this study, is lower than those of Malaysianlisted firms (31.3 per cent in the study of Haniffa and Cooke 2002) but is higher than theaverage of 18 per cent of Chinese voluntary disclosure practices by Wang et al. (2008).

The low level of social reporting information could be because social reportingdisclosure practices are relatively new in Vietnam. According to Krechowicz andFernando (2009), up until 2008, there has been no regulation that forces firms to reporton any environmental or social issues nor is there clear demand from the public toencourage the need for this type of information. In Krechowicz and Fernando (2009)study of social reporting among ten largest companies (by market capitalization in2008) in emerging Asian countries (India, Indonesia, Malaysia, Philippines, Thailandand Vietnam), Vietnam is found to have the lowest environmental and social disclosurescore. Thus, it is not surprising that among all types of disclosure, social reportingitems are disclosed the least.

In Table II, the descriptive statistics for the independent variables and the controlvariables are presented. The Vietnamese firm characteristics show that corporategovernance (proportion of independent directors on board) has a moderate mean of55.37 per cent. The average percentage of state ownership is 30.58 per cent. Stateownership in Vietnam is still highly concentrated because Vietnam is still in its earlystage of privatization, compared to other emerging economies such as China[7].Managerial ownership has a relatively low mean of 5.39 per cent[8]. Despite manyefforts to attract more foreign investors to its capital market, the average foreignownership of Vietnamese firms is still comparatively low with an average of14.36 per cent[9].

The statistical analysis utilizes a correlation table and multiple regressiontechniques to evaluate the possible relationships between key firm characteristics andthe level of voluntary disclosure (as measured by the VnDI ). Table III presents thecorrelation coefficients between dependent variable, independent variables and controlvariables using Pearson and Spearmans correlations. The results from Table III implythat state ownership is negatively correlated with voluntary disclosure (p 0.014). Bycontrast, voluntary disclosure is positively correlated with managerial ownership

Mean(%)

Median(%)

Standarddeviation

(%)Minimum

(%)Maximum

(%)

VnDI 24.23 23.81 9.17 0.10 49.00Director and Senior Managementinformation (three items)

51.85 66.67 33.75 0.00 100.00

Corporate and strategic information(14 items)

36.35 42.86 18.70 0.00 79.00

Forward looking information(14 items)

30.32 28.57 22.90 0.00 71.00

Financial and capital marketinformation (29 items)

22.22 24.14 11.40 0.00 41.00

Social reporting information (24 items) 12.59 8.33 11.01 0.00 8.00Table I.VnDI

132

ARA19,2

PearsonVietnamesedisclosure

index CORPGOV STATE MANAGERIAL FOREIGN PROFIT ASSET

SpearmanVietnamesedisclosureindex 1 0.030 0.362* 0.303* 0.288 0.222 0.437**

0.843 0.014 0.043 0.055 0.142 0.003CORPGOV 0.048 1 0.407** 0.025 0.166 0.008 0.078

0.752 0.006 0.868 0.274 0.960 0.611STATE 0.366* 0.305* 1 0.412** 0.464** 0.240 0.219

0.013 0.041 0.005 0.001 0.112 0.149MANAGERIAL 0.172 0.015 0.460** 1 0.034 0.173 0.082

0.259 0.923 0.001 0.826 0.254 0.594FOREIGN 0.260 0.081 0.475** 0.009 1 0.019 0.556**

0.084 0.596 0.001 0.956 0.899 0.000PROFIT 0.366* 0.025 0.221 0.154 0.086 1 0.144

0.013 0.870 0.144 0.311 0.573 0.346SIZE 0.390** 0.096 0.145 0.198 0.600** 0.278 1

0.008 0.531 0.341 0.193 0.000 0.064

Notes: The first number is correlation coefficient. The second number is p-value of significance ofcorrelation coefficient. Association of * and ** are significant at the 0.05 and 0.01 level (two-tailed),respectively

Table III.Pearson and Spearman

correlation

Variable Mean MedianStandarddeviation Minimum Maximum

CORPGOV H1 (%) 55.37 60.00 19.69 14.29 100.00STATE H2 (%) 30.58 33.55 22.76 0.00 79.06MANAGERIAL H3 (%) 5.40 1.91 8.11 0.00 34.42FOREIGN H4 (%) 14.36 6.25 15.03 0.00 46.85SIZE total assets (in millionVietnam Dong) 4,791,513 330,015 18,400,000 20,280 105,306,103SIZE log of total assets (CV) 5.68 5.52 0.76 4.31 8.02PROFIT ROA (CV) (%) 7.01 6.49 6.69 17.38 21.08Notes: CORPGOV, corporate governance is measured by number of independent directors divided bythe total number of all directors (independent and non-independent) (Eng and Mak, 2003; Lim et al.,2007); STATE, state ownership is measured by number of shares held by the government divided bythe total shares of the firm (Xiao and Yuan, 2007; Xiao et al., 2004; Jiang and Habib, 2009);MANAGERIAL, managerial ownership is defined by number of shares held by the management onboard (Circular 38/2007/TT-BTC Guidance on information disclosure in the stock market (underSecurities Law 2007) requires all Vietnamese listed firms to disclose proportion of shares held bymanagement on board. And thus, with the availability of this information, this study definesmanagerial ownership as proportion of shares held by members of the board.) divided by the totalshares of the firm (Short and Keasey, 1999; Morck et al., 1988; Davies et al., 2005); FOREIGN, foreignownership is measured as shares held by the foreign investors divided by the total shares of the firm(Haniffa and Cooke, 2002; Barako, 2004; Ho, 2009); SIZE is proxied by logarithm total assets of firm toeliminate the skewness in the data (Hossain et al., 1995); and PROFIT is defined as Return on assetwhich is calculated as net profit over the total assets of firm (Camfferman and Cooke, 2002; Ho, 2009)

Table II.Descriptive statistics forindependent and control

variables

133

Corporatecommunication

(p 0.043). Corporate governance and foreign ownership are not found to besignificantly related to the extent of voluntary disclosure. With respect to controlvariables, there is a positive significant correlation between voluntary disclosure andthe firm size (measured by log of total assets) (p 0.003). The correlation matrix alsoindicates that there is no multicollinearity problem as none of the correlationcoefficients exceed the limit of 0.80 (the maximum correlation figure in Table III is 0.6between size and foreign ownership)[10].

Table IV displays the results for multiple regression test of hypotheses. Resultsof Table IV multiple regression (model a) show that the adjusted coefficient ofdetermination (R2) of the model is 0.172, indicating that the predictor variablesof the model explains 17.2 per cent of the variation in the VnDI. This explanatorypower is lower than the study of voluntary disclosures by Eng and Mak (2003) withadjusted R2 of 20.61 per cent but is higher than Xiao and Yuan (2007) adjusted R2 of7.9 per cent.

Whilst agency theory suggests a positive relationship between corporategovernance and the level of voluntary disclosure, empirical evidence in this studysuggests that the proportion of independent directors on board (a proxy of corporategovernance) (p 0.322) is not statistically related to the extent of voluntary disclosurein the annual reports of 45 sample firms in Vietnam (although its stated percentage ofindependent directors is 55.37 per cent). Therefore, H1 is not supported (see Table IV).A possible explanation for this is that the number of independent directors on board isnot an effective monitoring mechanism in Vietnam. These independent directors maynot have any voice over the operation of the firms since control may still be dominatedby the non-independent directors (such as state officials and bureaucrats) who havebeen in the firms long enough to entrench their power and control within the firm.

State ownership is associated with voluntary disclosure (p 0.023), which supportsH2. As predicted, the state ownership is negatively related to the level of voluntarydisclosure. The finding in this study is consistent with earlier study of Luo et al. (2006)and Xiao et al. (2004) that report of negative association between state ownership andthe level of voluntary disclosure. There are several possible reasons for this result.First, under a centrally planned economy, accounting reports are prepared mainly forthe states planning and not for the purpose of obtaining external capital. Afterprivatization, the management board of these companies largely stayed the same[11]and thus, perhaps these managers are still too inexperienced to redirect their firms in amore market-oriented environment. As such, former SOEs firms still retain their samereporting behaviour. Second, since the state can easily access firm information, firmswith higher level of state ownership have little motivation to disclose additionalinformation because the demand for disclosure is weaker than for firms with lowerstate ownership. As shown in Table II, the state ownership remains a high level of over30 per cent in Vietnam.

Table IV (regression model a) also reveals that managerial ownership is positivelyassociated with voluntary disclosure (p 0.006), supporting H3. This finding isconsistent with agency theory and prior studies of Jiang and Habib (2009) and MohdGhazali and Weetman (2006) who both report positive associations betweenmanagerial ownership and the extent voluntary disclosure in New Zealand andMalaysia, respectively. The positive relationship between manager ownership andvoluntary disclosures supports the view that since managers wealth is tied withthe firms, managers have motivations to engage in activities such as providing extrainformation to enhance their share value.

134

ARA19,2

Var

iab

les

inth

eeq

uat

ion

Con

stan

tC

OR

PG

OV

ST

AT

EM

AN

AG

ER

IAL

FO

RE

IGN

SIZ

EP

RO

FIT

Regressionmodela:

Vn

DI il ib1

CO

RP

GO

Vib2

ST

AT

Eib3

MA

NA

GE

RIA

Lib4

FO

RE

IGNig1

SIZ

Eig2

PR

OF

ITi

Z iE

xp

ecte

dsi

gn

Bet

a0

.065

0.2

80.

341

0.06

50.

437

0.1

63t-

stat

0.6

150

.467

2.0

692.

647

0.39

03.

183

1.1

81p-

val

ue

0.54

20.

678

0.02

3*0.

006*

*0.

350

0.00

3**

0.12

2R

2

0.19

1,ad

just

edR

2

0.17

2,F

10.1

3,si

gn

ific

ance

inte

rcep

t0.

003,N

45Regressionmodelb:

DS

MD

I il ib1

CO

RP

GO

Vib2

ST

AT

Eib3

MA

NA

GE

RIA

Lib4

FO

RE

IGNig1

SIZ

Eig2

PR

OF

ITiZ i

Ex

pec

ted

sig

n

B

eta

0.2

830

.535

0.3

050

.43

0.45

10.

21t-

stat

0.05

1.7

582

.354

1.7

002

.099

2.58

41.

265

p-v

alu

e0.

480.

956

0.01

2*0.

951

0.97

80.

007*

*0.

107

R2

0.24

1,ad

just

edR

2

0.12

1,F

2.01

,si

gn

ific

ance

inte

rcep

t0.

088,N

45

Notes

:Th

eta

ble

show

sst

and

ard

ized

coef

fici

ents

andt-

stat

isti

csin

mu

ltip

lere

gre

ssio

ns

for

the

resp

ecti

ve

ind

epen

den

tv

aria

ble

san

dco

ntr

olv

aria

ble

sin

the

mod

el.A

ssoc

iati

onof

*an

d**

are

sig

nif

ican

tat

the

0.05

and

0.01

lev

el,r

esp

ecti

vel

y(o

ne-

tail

ed).

Vn

DI

isth

eto

tal

vol

un

tary

dis

clos

ure

ind

exfo

rth

esa

mp

lefi

rm;D

SM

DI

isth

eto

tal

Dir

ecto

ran

dS

enio

rM

anag

emen

tv

olu

nta

ryd

iscl

osu

rein

dex

for

the

sam

ple

firm

;CO

RP

GO

V,c

orp

orat

eg

over

nan

ceis

mea

sure

db

yn

um

ber

ofin

dep

end

ent

dir

ecto

rsd

ivid

edb

yth

eto

tal

nu

mb

erof

all

dir

ecto

rs(i

nd

epen

den

tan

dn

on-

ind

epen

den

t);

ST

AT

E,

stat

eow

ner

ship

ism

easu

red

by

nu

mb

erof

shar

esh

eld

by

the

gov

ern

men

td

ivid

edb

yth

eto

tal

shar

esof

the

firm

;MA

NA

GE

RIA

L,m

anag

eria

low

ner

ship

isd

efin

edb

yn

um

ber

ofsh

ares

hel

db

yth

em

anag

emen

ton

boa

rdd

ivid

edb

yth

eto

tals

har

esof

the

firm

;FO

RE

IGN

,for

eig

now

ner

ship

ism

easu

red

assh

ares

hel

db

yth

efo

reig

nin

ves

tors

div

ided

by

the

tota

lsh

ares

ofth

efi

rm;S

IZE

isp

rox

ied

by

log

arit

hm

tota

las

sets

offi

rmto

elim

inat

eth

esk

ewn

ess

inth

ed

ata;

PR

OF

ITis

def

ined

asre

turn

onas

set

wh

ich

isca

lcu

late

das

net

pro

fit

over

the

tota

las

sets

offi

rm.;l j

,b 1

,2y

n,g

1,2y

n

coef

fici

ents

toin

dep

end

ent

and

con

trol

var

iab

les;

i

firm

spec

ific

;an

dZ i

erro

rte

rm

Table IV.Regression results

135

Corporatecommunication

Foreign ownership, however, does not have a significant association with the level ofvoluntary disclosures (p 0.350). Therefore, H4 is not supported. One possibleexplanation is that the 49 per cent maximum foreign ownership ceiling may limit thepower to influence on the reporting behaviour of the firms, specifically voluntarydisclosures practices. Foreign ownership in Vietnam has an average of o15 per cent(see Table II).

With respect to the control variables, while profit has no significant influence(p 0.122), size of the firm has a significant positive association with the extent ofvoluntary disclosure (p 0.002). This means that within Vietnamese listed firms, thebigger the firm is, the more information is voluntarily disclosed. There are severalpossible reasons for this finding. First, bigger firms usually have more resourcesto collect and present information and thus, it costs proportionally less for them toprovide extra information than the smaller firms. This finding is supported byagency theory and a wealth of prior studies (Eng and Mak, 2003; Meek et al., 1995;Cheng and Courtenay, 2006; Haniffa and Cooke, 2002; Chau and Gray, 2010). Second,larger firms are more sensitive to political costs, thus, these firms disclose moreinformation in order to alleviate public criticism intervention in their affairs (Watts andZimmerman, 1990).

To enhance understanding of corporate voluntary disclosure among Vietnameselisted firms, the dependent variable of total voluntary disclosure index is replaced bythe Director and Senior Management voluntary disclosure index. Director and SeniorManagement voluntary disclosure index is chosen because it is disclosed the mostamong sample firms (mean of 51.85 per cent).

The additional analysis in Table IV (regression model b) reveals that Directorand Senior Management voluntary disclosure index is significantly and negativelyassociated with state ownership (p 0.012) and positively associated with the size ofthe firm (p 0.007).

The negative association between state ownership and voluntary disclosure ofDirector and Senior Management means that a high proportion of state ownershipinfluences firms to disclose less information about the director information andmanagement team. A possible explanation for this is that unlike western countries,Vietnameses managers, especially those in SOEs are expected to portray goodbehaviour towards society. This is because in the centrally planned economy, all ofthe managers of SOEs firms are appointed politically to safeguard the state assets andfulfil the states main goal of maintaining employment and maximizing social welfare.Despite firms being privatized, managers in firms with dominating state ownershipstill view themselves as politicians and thus, they have little incentive to discloseinformation about them to protect their images. Second, in firms with high stateownership, the state usually appoints its directors. Since the state already hasinformation about these directors or senior managers and there is lesser need for firmsto disclose this information.

5. Implications and conclusionThis study is one of the first examining the level of voluntary disclosure amongVietnamese listed firms. In particular, two main aims are pursued: to examine the levelof voluntary disclosure and to explore the possible determinants of voluntarydisclosure. The evidence shows that the level of voluntary disclosures among listedVietnamese firms is relatively low (24.23 per cent). This finding is consistent with theprevious studies of La Porta et al. (2000) who state that the level of voluntary disclosure

136

ARA19,2

is low in developing countries. The fact that Vietnamese stock exchange is relativelyyoung[12] and most of listed firms are former SOEs who in the past did not need toprovide financial reports are key plausible explanations for such low level of voluntarydisclosure.

Corporate governance is not significantly associated with voluntary disclosure,although the majority of Vietnamese listed firms meet its requirements of minimumone-third of independent directors on board. This indicates that although there is highlevel of compliance (in form), the presence of independent directors may not itself bean effective monitoring mechanism. Hence, this study suggests that Vietnameseregulators should not only focus on requirements regarding number of independentdirectors on board but also should seek to ensure these independent directors are infact truly independent enough to have the actual power to monitor managersdecisions.

The finding of negative association between the state ownership and voluntarydisclosure provides support for future privatization in Vietnam. Specifically,Vietnamese regulators should focus on strengthening the regulations governing thelevel of information transparency in these state-owned firms. Moreover, managerialownership is found to be positively associated with the level of voluntary disclosure.This means that higher managerial ownership encourages firms to providemore information. Although Vietnam is trying to attract international capital, theaverage foreign ownership among the sample firms remains below 15 per cent. Theresults from this study suggest that foreign ownership does not have enough power toinduce the managers of Vietnamese listed firms to communicate more information.

Overall, the empirical results of this study not only contribute to the extantliterature but also provide valuable insights regarding the level of voluntaryinformation disclosure among listed firms of an emerging and important economy Vietnam. Given this relatively low level of voluntary disclosure (24.23 per cent), theVietnamese regulators should be encouraged to strengthen its regulatory frameworksurrounding the level of listed firms communication.

This study is not without limitations. Specifically, as this is a cross-sectional studythat focuses only on 2008 annual reports, the results generated from this study could bebiased as disclosures can change over time. However, in prior years, the Vietnamesestock market has not been fully developed yet and thus, the sample size of earlier yearsare not sufficient to conduct a comprehensive longitudinal study. It is suggested that inthe future, research should explore a long-term, large-scale longitudinal study toexamine the pattern of voluntary disclosures over time.

Notes

1. Doi Moi means new and renovation in Vietnamese.

2. The first two firms listed in HoSTC are Refrigeration Electrical Engineering Joint StockCorporation and Saigon Cable and Telecommunication Material Joint Stock Company.

3. From a population of 312 Vietnamese listed firms, there are 91 newly listed firms in 2008.These 91 newly listed firms are eliminated from the population criteria as it is assumed thatdisclosure practices cannot be assessed realistically if firms are listed on the stock exchangefor less than a year (Owusu-Ansah, 1998). Thus, the sample of 45 randomly selected firmsrepresents 20.36 per cent of the total number of listed firms in the sampling population.

4. These individual experts have at least ten years of auditing experiences with more than fiveyears of auditing in Vietnam.

137

Corporatecommunication

5. The initial list is firstly sent to 20 experts in Vietnam. Among the 20 surveys sent, 12 arereturned with eight responding (40 per cent response rate) with thorough and comprehensivereplies. According to Smith (2003), a response rate of less than 25 per cent is common inaccounting research. As a result of these experts responses, 25 items are removed due to itsmandatory nature. Interviews are subsequently carried out with three of these eightindividuals for final clarification of these replies. The purpose of verification by experts is toincorporate their opinions about the relevance of each disclosure item in the context ofVietnamese financial reporting environment to generate a more valid disclosure index. Fromthese interviews, another ten items are excluded as they are deemed to have insufficientrelevance to the reporting environment of Vietnam.

6. Circular 38/2007/TT-BTC Guidance on information disclosure in the stock market(under Securities Law 2007) require all Vietnamese listed firms to disclose proportionof shares held by management on board. With the availability of this information, thisstudy defines managerial ownership as proportion of shares held by members of theboard.

7. As a point of reference, Xiao et al. (2004)s study of voluntary Internet-based disclosuresreport an average of 7 per cent state ownership among 300 largest listed firms in China in2001.

8. In a study of Leung and Horwitz (2004) of Hong Kong listed firms, the average ownershipheld by members on board is 38.6 per cent.

9. Compare with other emerging markets in Kenya, Barako (2007) documents an averageforeign ownership of 28.1 per cent and 28.3 per cent for the years 1992 and 2001, respectively.Ho et al. (2008) find that average foreign ownership in Malaysian listed firms in 2006 is16 per cent.

10. According to Cooper and Schindler (2008), two variables are highly correlated at 0.80 or agreater level.

11. A survey of 261 privatized firms in Southern Vietnam 2002 reveals that in more than80 per cent of the firms, there was no change in its management board, during and afterprivatization (Nguyen, 2002).

12. Ho Chi Minh and Hanoi Stock Exchange established in 2000 and 2005, respectively.

References

Ajinkya, B., Bhojraj, S. and Sengupta, P. (2005), The governance role of institutional investorsand outside directors on the properties of management earnings forecasts, Journal ofAccounting Research, Vol. 43 No. 3, pp. 343-76.

Akhtaruddin, M., Hossain, M., Hossain, M. and Yao, L. (2009), Corporate governance andvoluntary disclosure in corporate annual reports of Malaysian listed firms, Journal ofApplied Management Accounting Research, Vol. 7 No. 1, pp. 1-19.

Alsaeed, K. (2005), The association between firm-specific characteristics and disclosure:the case of Saudi Arabia, Journal of American Academy of Business, Cambridge, Vol. 7No. 1, pp. 310-21.

Armitage, S. and Marston, C.L. (2008), Corporate disclosure, cost of capital and reputation:evidence from finance directors, The British Accounting Review, Vol. 40 No. 4, pp. 314-36.

Barako, D.G. (2004), Voluntary corporate disclosure by Kenyan companies: a longitudinalexploratory study, PhD thesis, University of Western Australia, Perth.

Barako, D.G. (2007), Determinants of voluntary disclosures in Kenyan companies annualreports, African Journal of Business Management, Vol. 1 No. 5, pp. 113-28.

138

ARA19,2

Barako, D.G., Hancock, P. and Izan, I.H.Y. (2006), Factors influencing voluntary corporatedisclosure by Kenyan companies, Corporate Governance: An International Review, Vol. 14No. 2, pp. 107-25.

Bradbury, M. (1992), Voluntary disclosure of financial segment data: New Zealand evidence,Accounting and Finance, Vol. 32 No. 1, pp. 15-26.

Bui, T.M.V., Yapa, P.W.S. and Cooper, B.J. (2011), Accounting development in Vietnam: thestate and accounting regulation, 34th Annual Congress of European AccountingAssociation, Rome.

Buzby, S.L. (1975), Company size, listed versus unlisted stocks, and the extent of financialdisclosure, Journal of Accounting Research, Vol. 13 No. 1, pp. 16-37.

Camfferman, K. and Cooke, T.E. (2002), An analysis of disclosure in the annual reports of UKand Dutch companies, Journal of International Accounting Research, Vol. 1 No. 3, pp. 3-30.

Chau, G. and Gray, S.J. (2010), Family ownership, board independence and voluntary disclosure:evidence from Hong Kong, Journal of International Accounting, Auditing and Taxation,Vol. 19 No. 2, pp. 93-109.

Chau, G.K. and Gray, S.J. (2002), Ownership structure and corporate voluntary disclosurein Hong Kong and Singapore, The International Journal of Accounting, Vol. 37 No. 2,pp. 247-65.

Chen, C.J.P. and Jaggi, B. (2000), Association between independent non-executive directors,family control and financial disclosures in Hong Kong, Journal of Accounting and PublicPolicy, Vol. 19 Nos 4-5, pp. 285-310.

Cheng, E.C. and Courtenay, S.M. (2006), Board composition, regulatory regime and voluntarydisclosure, The International Journal of Accounting, Vol. 41 No. 3, pp. 262-89.

Chow, C.W. and Wong-Boren, A. (1987), Voluntary financial disclosure by Mexicancorporations, Accounting Review, Vol. 62 No. 3, pp. 533-41.

Cooke, T.E. (1989), Voluntary corporate disclosure by Swedish companies, Journal ofInternational Financial Management & Accounting, Vol. 1 No. 77, pp. 171-95.

Cooke, T.E. (1992), The impact of size, stock market listing and industry type on disclosure inthe annual reports of Japanese listed corporations, Accounting and Business Research,Vol. 22 No. 87, pp. 229-37.

Cooke, T.E. and Wallace, R.S.O. (1989), Global surveys of corporate disclosure practices andaudit firm: a review essay, Accounting and Business Research, Vol. 20 No. 77, pp. 47-58.

Cooper, D.R. and Schindler, P.S. (2008), Business Research Methods, McGraw-Hill Irwin, Boston, MA.

Craswell, A.T. and Taylor, S.L. (1992), Discretionary disclosure of reserves by oil and gascompanies: an economic analysis, Journal of Business Finance & Accounting, Vol. 19No. 2, pp. 295-308.

Davies, J.R., Hillier, D. and McColgan, P. (2005), Ownership structure, managerial behavior andcorporate value, Journal of Corporate Finance, Vol. 11 pp. 645-60.

Duc, M. (2010), (Vietnams securitiesgrowth exponentially), available at: www.vneconomy.vn/20100718042232460p0c7/chung-khoan-viet-nam-tang-truong-theo-cap-so-nhan (accessed 10 November 2010).

Eng, L.L. and Mak, Y.T. (2003), Corporate governance and voluntary disclosure, Journal ofAccounting and Public Policy, Vol. 22 No. 4, pp. 325-45.

Fama, E.F. and Jensen, M.C. (1983), Separation of ownership and control, Journal of Law andEconomics, Vol. 26 No. 2, pp. 301-25.

Ferguson, M.J., Lam, K.C.K. and Lee, G.M. (2002), Voluntary disclosure by state-ownedenterprises listed on the stock exchange of Hong Kong, Journal of International FinancialManagement & Accounting, Vol. 13 No. 2, pp. 125-52.

139

Corporatecommunication

Forker, J.J. (1992), Corporate governance and disclosure quality, Accounting and BusinessResearch, Vol. 22 No. 86, pp. 111-24.

Garca-Meca, E. and Sanchez-Ballesta, J.P. (2010), The association of board independence andownership concentration with voluntary disclosure: a meta-analysis, EuropeanAccounting Review, Vol. 19 No. 3, pp. 603-27.

Grossman, S.J. and Hart, O.D. (1980), Takeover bids, the free-rider problem, and the theory of thecorporation, The Bell Journal of Economics, Vol. 11 No. 1, pp. 42-64.

Gul, F.A. and Leung, S. (2004), Board leadership, outside directors expertise andvoluntary corporate disclosures, Journal of Accounting and Public Policy, Vol. 23No. 5, pp. 351-79.

Haniffa, R.M. and Cooke, T.E. (2002), Culture, corporate governance and disclosure in Malaysiancorporations, Abacus, Vol. 38 No. 3, pp. 317-49.

Healy, P.M. and Palepu, K.G. (2001), Information asymmetry, corporate disclosure, and thecapital markets: a review of the empirical disclosure literature, Journal of Accounting andEconomics, Vol. 31 Nos 1-3, pp. 405-40.

Ho, P., Tower, G. and Taylor, G. (2008), The influence of ownership structure on the pattern ofcorporate information among Malaysian listed firms, 20th Asia-Pacific Conference onInternational Accounting Issues, Paris, 9-12 November.

Ho, P.L. (2009), Determinants of Voluntary Disclosure by Malaysian Listed Companies Over Time,PhD thesis, Curtin University, Perth.

Ho, S.S.M. and Wong, K.S. (2001), A study of the relationship between corporate governancestructures and the extent of voluntary disclosure, Journal of International Accounting,Auditing and Taxation, Vol. 10 No. 2, pp. 139-56.

Hossain, M., Perera, M.H.B. and Rahman, A.R. (1995), Voluntary disclosure in the annual reportsof New Zealand companies, Journal of International Financial Management &Accounting, Vol. 6 No. 1, pp. 69-87.

Hossain, M., Tan, L.M. and Adams, M. (1994), Voluntary disclosure in an emerging capitalmarket: some empirical evidence from companies listed on the Kuala Lumpur StockExchange, International Journal of Accounting Education and Research in InternationalBusiness and Finance, Vol. 29 No. 3, pp. 334-51.

Inchausti, B.a.G. (1997), The influence of company characteristics and accounting regulationon information disclosed by Spanish firms, European Accounting Review, Vol. 6No. 1, pp. 45-68.

Jensen, M.C. and Meckling, W.H. (1976), Theory of the firm: managerial behavior, agency costsand ownership structure, Journal of Financial Economics, Vol. 3 No. 4, pp. 305-60.

Jiang, H. and Habib, A. (2009), The impact of different types of ownership concentration onannual report voluntary disclosures in New Zealand, Accounting Research Journal, Vol. 22No. 3, pp. 275-304.

Krechowicz, D. and Fernando, H. (2009), Undisclosed risk: corporate environmental and socialreporting in emerging Asia, available at: www.pdf.wri.org/undisclosed_risk_emerging_asia.pdf (accessed 12 June 2010).

Lakhal, F. (2005), Earning voluntary disclosures and corporate governance: evidence fromFrance, Review of Accounting and Finance, Vol. 4 No. 3, pp. 64-85.

La Porta, R., Lopez-de-Silanes, F., Shleifer, A. and Vishny, R. (2000), Investor protection andcorporate governance, Journal of Financial Economics, Vol. 58 Nos 1-2, pp. 3-27.

Leung, S. and Horwitz, B. (2004), Director ownership and voluntary segment disclosure:Hong Kong evidence, Journal of International Financial Management & Accounting,Vol. 15 No. 3, pp. 235-60.

140

ARA19,2

Leventis, S. and Weetman, P. (2004), Voluntary disclosures in an emerging capital market: someevidence from the Athens Stock Exchange, Advances in International Accounting, Vol. 17,pp. 227-50.

Lim, S., Matolcsy, Z. and Chow, D. (2007), The association between board composition and differenttypes of voluntary disclosure, European Accounting Review, Vol. 16 No. 3, pp. 555-83.

Lopez-de-Foronda, O., Lopez-Iturriaga, F.J. and Santamara-Mariscal, M. (2007), Ownershipstructure, sharing of control and legal framework: international evidence, CorporateGovernance: An International Review, Vol. 15 No. 6, pp. 1130-43.

Luo, S., Courtenay, S.M. and Hossain, M. (2006), The effect of voluntary disclosure, ownershipstructure and proprietary cost on the return-future earnings relation, Pacific-BasinFinance Journal, Vol. 14 No. 5, pp. 501-21.

Malone, D., Fries, C. and Jones, T. (1993), An empirical investigation of the extent of corporatefinancial disclosure in the oil and gas industry, Journal of Accounting, Auditing &Finance, Vol. 8 No. 3, pp. 249-75.

Mangena, M. and Tauringana, V. (2007), Disclosure, corporate governance and foreign shareownership on the Zimbabwe Stock Exchange, Journal of International FinancialManagement & Accounting, Vol. 18 No. 2, pp. 53-85.

Marston, C.L. and Shrives, P.J. (1991), The use of disclosure indices in accounting research: areview article, British Accounting Review, Vol. 23 No. 3, pp. 195-210.

Meek, G.K., Roberts, C.B. and Gray, S.J. (1995), Factors influencing voluntary annual reportdisclosures by US, UK and continental European multinational corporations, Journal ofInternational Business Studies, Vol. 26 No. 3, pp. 555-72.

Mohd Ghazali, N.A. and Weetman, P. (2006), Perpetuating traditional influences: voluntarydisclosure in Malaysia following the economic crisis, Journal of International Accounting,Auditing and Taxation, Vol. 15 No. 2, pp. 226-48.

Morck, R., Shleifer, A. and Vishny, R. (1988), Management ownership and market valuation: anempirical analysis, Journal of Financial Economics, Vol. 20, pp. 293-315.

Nagar, V., Nanda, D. and Wysocki, P.D. (2003), Discretionary disclosure and stock-basedincentives, Journal of Accounting and Economics, Vol. 34 Nos 1-3, pp. 283-309.

Naser, K. and Nuseibeh, R. (2003), Quality of financial reporting: evidence from the listed Saudinonfinancial companies, The International Journal of Accounting, Vol. 38 No. 1, pp. 41-69.

Naser, K., Al-Khatib, K. and Karbhari, Y. (2002), Empirical evidence on the depth of corporateinformation disclosure in developing countries: the case of Jordan, International Journalof Commerce and Management, Vol. 12 Nos 3/4, pp. 122-55.

Ng, E.J. and Koh, H.C. (1994), An agency theory and probit analytic approach to corporate non-mandatory disclosure compliance, Asia-Pacific Journal of Accounting, Vol. 1 No. 1, pp. 29-44.

Nguyen, D.T. and Pham, H. (1997), Vietnam, in Ma, R. (Ed.), Financial Reporting in the PacificAsia Region, World Scientific, River Edge, NJ, pp. 413-33

Nguyen, H.G. (2002), Survey on Post-Equitization A Preliminary Report. Post-Equitization inSouthern Provinces, Central Institute for Economic Management, Ho Chi Minh City.

Owusu-Ansah, S. (1998), The impact of corporate attributes on the extent of mandatorydisclosure and reporting by listed companies in Zimbabwe, International Journal ofAccounting, Vol. 33 No. 5, pp. 605-31.

Prowse, S. (1995), Corporate governance in an international perspective: a survey of corporatecontrol mechanisms among large firms in the US, UK and Germany, Financial Markets,Institutions, and Instruments, Vol. 4 No. 1, pp. 1-61.

Raffournier, B. (1995), The determinants of voluntary financial disclosure by Swiss listedcompanies, European Accounting Review, Vol. 4 No. 2, pp. 261-80.

141

Corporatecommunication

Sarikas, R.H.S., Vu, D.H. and Djatej, A.M. (2009), International influence on accountancy inVietnam, in McGee, R.W. (Ed.), Corporate Governance in Developing Economies, SpringerScience, North Miami, FL, pp. 181-90.

Shleifer, A. and Vishny, R.W. (1997), A survey of corporate governance, The Journal of Finance,Vol. 52 No. 2, pp. 737-83.

Short, H. and Keasey, K. (1999), Managerial ownership and the performance of firms: evidencefrom the UK, Journal of Corporate Finance, Vol. 5 No. 1, pp. 79-101.

Singhvi, S.S. and Desai, H. (1971), An empirical analysis of the quality of corporate financialdisclosure, The Accounting Review, Vol. 46 No. 1, pp. 129-38.

Smith, M. (2003), Research Methods in Accounting, Sage Publications, London.

State Securities Commission of Vietnam (2010),2010 (Conference on the Progress of Developing StockMarket 2010),

available at: www.ssc.gov.vn/portal/page/portal/ubck/tintuc/1107861?p_page_id1107861&pers_id1108311&folder_id&item_id23595082&p_details1 (accessed 9 June 2010).

Truong, D.L., Lanjouw, G. and Lensink, R. (2006), The impact of privatization on firmperformance in a transition economy: the case of Vietnam, Economics of Transition,Vol. 14 No. 2, pp. 349-89.

Wallace, R.S.O. and Naser, K. (1995), Firm-specific determinants of the comprehensiveness ofmandatory disclosure in the corporate annual reports of firms listed on the stock exchangeof Hong Kong, Journal of Accounting and Public Policy, Vol. 14 No. 4, pp. 311-68.

Wang, K., Sewon, O. and Claiborne, M.C. (2008), Determinants and consequences of voluntarydisclosure in an emerging market: evidence from China, Journal of InternationalAccounting, Auditing and Taxation, Vol. 17 No. 1, pp. 14-30.

Watts, R.L. and Zimmerman, J.L. (1990), Positive accounting theory: a ten year perspective, TheAccounting Review, Vol. 65 No. 1, pp. 259-85.

Wilson, D. and Stupnytska, A. (2007), The N-11: more than an acronym, Global EconomicsPaper, Goldman Sachs Global Research Centres, 153.

World Bank (2006), Report on the observance of standards and codes (ROSC) corporategovernance country assessment Vietnam, available at: www.worldbank.org/ifa/rosc_cg_vm.pdf (accessed 17 August 2010).

Xiao, H. and Yuan, J. (2007), Ownership structure, board composition and corporate voluntarydisclosure: evidence from listed companies in China, Managerial Auditing Journal, Vol. 22No. 6, pp. 604-19.

Xiao, J.Z., Yang, H. and Chow, C.W. (2004), The determinants and characteristics of voluntaryinternet-based disclosures by listed Chinese companies, Journal of Accounting and PublicPolicy, Vol. 23 No. 3, pp. 191-225.

Appendix 1

Description Number of listed firms

Vietnamese listed firms in 2008 312Less newly listed firms in 2008 91Total firms fitting the selection criteria 221Total firms in this study 45Percentage of firms from total listed firms 20.36

Table AI.Sample-selectionprocedures

142

ARA19,2

Appendix 2

VnDI

Corporate and strategic information (14 items)

Statement of strategy and objectives financialStatement of strategy and objectives socialDiscussion on the impact of strategy on current resultsDiscussion on the impact of strategy on future resultsStatements of strategy, implementation measures improve business (product quality/service/businessperformance)Picture of major productsPhysical output and capacity utilizationDescriptive information of marketing network (foreign), descriptive information of marketing network(domestic)Discussion of research and development activitiesDiscussion of competitive environmentGeneral discussion of industry trends (past)Discussion of research and development activitiesDiscussion of future products developmentsRate of return on expected projectsFinancial and capital market information (29 items)

Gearing ratiosReturn on equity ratioReturn on capital employed ratioOther ratios that are not mandatoryCash flows ratioName of the stock exchange the firm is listedAgeing of debtorsDisclosure of intangible valuations (except goodwill and brands)Competitors analysisMarket share analysisVolume of shares traded (trend)Volume of shares traded (year-end)Shares price information (trend)Share prices information (year-end)Market capitalization (trend)Market capitalization (year-end)Discussion on the effects of inflation rates on current resultsDiscussion on the effects of interest rates on current resultsDiscussion of foreign currency exposure to firms activities by the managersDiscussion on the effects of foreign currency on current resultsMajor exchange rates use in the accountsProportion of raw material purchase localBreakdown and analysis of operating expensesBreakdown and analysis of administrative expensesBreakdown and analysis of sales and revenues

(continued)Table AII.

VnDI

143

Corporatecommunication

VnDI

Discussion of advertising, marketing activities qualitativeDiscussion of advertising, marketing activities quantitativeBreakdown and analysis of operating expenses into fixed/variablesOrder book or backlog informationDirector and senior management information (three items)

Identification of directors/senior management and their functionsOther directorship held by directors/senior managersPicture of directors/senior management teamForward-looking information (14 items)

Industry assumptions underlying forecastGeneral discussion of future industry trendDiscussion of external factors affecting the firms future (economics, politics and technology)Forecast of sales qualitativeForecast of sales quantitativeForecast of profits qualitativeForecast of profits quantitativeForecast of cash flows qualitativeForecast of cash flows quantitativeDiscussion on future expenditureDiscussion on the effects of interest rates on future operating activitiesDiscussion on the effects of inflation on future operating activitiesDiscussion on the effects of foreign currency on future operating activitiesIndex (selling prices/quantity sales/raw materials prices)Social reporting information (24 items)

Company awardsGeneral philanthropyCommunity programmes (health and education) implementedParticipation in government social campaignsCharitable donations (specific names/amounts)Environmental protection programmes (quantitative)Environmental protection programmes (qualitative)Statement of firms environmental policiesDiscussion on the safety of the productsEmployee appreciationPicture of employees welfareGeographical distribution of employeesCategories of employees by genderBreak down of line-of-business distribution of employeesReasons for changes in employees numbers or categoriesGeneral retrenchment/redundancy informationEqual opportunity policy statementEffects of Employment Contract ActNature of trainingAmount spent on trainingNumber of employees trainedDiscussion of workplace safety (costs and measurements)Data on accidentsStatements concerned with wealth created (such as value added statement)Table AII.

144

ARA19,2

Var

iab

les

Not

atio

nP

red

icte

dsi

gn

Ty

pe

ofd

ata

Des

crip

tion

Dependentvariable

Vie

tnam

ese

dis

clos

ure

ind

exV

nD

I iR

atio

Rat

ioof

tota

lac

tual

dis

clos

ure

scor

efo

rfi

rmi

inth

e20

08an

nu

alre

por

t,d

ivid

eb

yth

em

axim

um

pos

sib

lesc

ore

ofth

eta

ilor

edin

du

stry

dis

clos

ure

ind

exfo

rfi

rmi

Independentvariables

Cor

por

ate

gov

ern

ance

CO

RP

GO

V

Rat

ioN

um

ber

ofin

dep

end

ent

dir

ecto

rsst

ated

inth

e20

08an

nu

alre

por

tof

firm

i,d

ivid

edb

yth

eto

tal

nu

mb

erof

all

dir

ecto

rs(b

oth

ind

epen

den

tan

dn

on-

ind

epen

den

t)th

e20

08an

nu

alre

por

tof

firm

iS

tate

own

ersh

ipS

TA

TE

R

atio

Nu

mb

erof

ord

inar

you

tsta

nd

ing

shar

esh

eld

by

the

gov

ern

men

tin

firm

ias

atth

ecu

t-of

fd

ate

spec

ifie

din

the

2008

ann

ual

rep

ort

offi

rmi,

div

ided

by

the

tota

ln

um

ber

ofor

din

ary

outs

tan

din

gsh

ares

offi

rmi

asat

the

cut-

off

dat

esp

ecif

ied

inth

e20

08an

nu

alre

por

tof

firm

iM

anag

eria

low

ner

ship

MA

NA

GE

RIA

L

Rat

ioN

um

ber

ofor

din

ary

outs

tan

din

gsh

ares

hel

db

yth

em

emb

ers

ofb

oard

man

agem

ent

infi

rmia

sat

the

cut-

off

dat

esp

ecif

ied

inth

e20

08an

nu

alre

por

tof

firm

i,d

ivid

edb

yth

eto

tal

nu

mb

erof

ord

inar

you

tsta

nd

ing

shar

esof

firm

ias

atth

ecu

t-of

fd

ate

spec

ifie

din

the

2008

ann

ual

rep

ort

offi

rmi

For

eig

now

ner

ship

FO

RE

IGN

R

atio

Nu

mb

erof

ord

inar

you

tsta

nd

ing

shar

esh

eld

by

the

sen

ior

man

agem

ent

infi

rmia

sat

the

cut-

off

dat

esp

ecif

ied

inth

e20

08an

nu

alre

por

tof

firm

i,d

ivid

edb

yth

eto

tal

nu

mb

erof

ord

inar

you

tsta

nd

ing

shar

esof

firm

ias

atth

ecu

t-of

fd

ate

spec

ifie

din

the

2008

ann

ual

rep

ort

offi

rmi

Controlvariables

Siz

eS

IZE

R

atio

Nat

ura

llo

gar

ith

mto

tal

asse

tsof

firm

ias

rep

orte

din

the

2008

ann

ual

rep

ort

Pro

fita

bil

ity

PR

OF

IT

Rat

ioR

atio

ofn

etp

rofi

tto

tota

lass

ets

offi

rmia

sre

por

ted

inth

e20

08an

nu

alre

por

tl j

,b 1

,2y

n,g 1

,2y

nC

oeff

icie

nts

toin

dep

end

ent

and

con

trol

var

iab

les

iF

irm

spec

ific

Z iE

rror

term

Table AIII.Definitions of dependent,independent and control

variables

Appendix

3

145

Corporatecommunication

About the authors

Greg Tower is a FCPA and Research Professor in the School of Accounting at Curtin BusinessSchool, Curtin University, Perth, Australia. His main research areas are international accounting,financial reporting and business communication. Greg Tower is the corresponding author andcan be contacted at: G.Tower@curtin.edu.au

Kelly Anh Vu is a PhD candidate in the School of Accounting at Curtin Business School,Curtin University, Perth, Australia. Her main research interests are financial reporting inemerging countries.

Glennda Scully is Head of the School of Accounting at Curtin University. Her researchinterests include behavioural decision making, voluntary disclosure in emerging markets andresearch in teaching scholarship.

To purchase reprints of this article please e-mail: reprints@emeraldinsight.comOr visit our web site for further details: www.emeraldinsight.com/reprints

146

ARA19,2

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.