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INTRODUCTION
1. Research motivations
Financial reporting information (FRI) is one of the
information channels that listed companies be required to
publish on the stock market. In the stock market, the listed
company supply information, the investor is primarily subject to
receive and use this information in making their decisions. The
quality of FRI depends on the quality of the set of procedures:
preparing, presentation and disclosure of the listed company,
these procedures are influenced by internal and external factors
of the enterprise.
FRI quality is influenced by many factors in which corporate
governance (CG) is concerned over recent decades. CG
includes internal and external mechanisms. Internal
mechanisms are setting up structures to control behavior
preparing, presentation and disclosure. The effectiveness of the
mechanism will help high quality financial reporting. Academic
research has found an association between weaknesses in
governance and poor financial reporting quality (Cohen, 2004).
According to the author's knowledge, in Vietnam there are
few studies measuring the quality of FRI as well as an
assessment of the impact of CG on the quality of
comprehensive FRI. Therefore, the study chooses subject: “The
impact of corporate governance on the quality of financial
reporting information of listed companies in Vietnam”.
2. Research objectives
- The first research objective is to determine the factors of
measurement quality of FRI of listed companies in Vietnam.
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- The second research objective is aimed at determining the
impact of CG characteristics on the quality of FRI.
- The last research objective is to assess the reality of quality
of FRI and the impact of CG on the quality of FRI of listed
companies in Vietnam.
3. Research questions
To achieve these objectives, there are three study questions
which are set out as follows:
The first question: What level of quality of FRI of listed
companies in Vietnam is assessed?
The second question: How is the CG impact on the quality
of Vietnamese FRI?
The third question: What is orientation to strengthen CG and
thus enhance the quality of FRI of listed companies in Vietnam?
4. Research subjects and scope of research
Research subjects
The study subject of this thesis is the quality of FRI and the
impact of CG on the quality of FRI.
Scope of research
- Investigated subjects were FRI and characteristics of the
CG of listed companies on HOSE and HNX in fiscal year 2012.
- FRI including financial and non-financial information is
now published in the reports, namely: annual reports, corporate governance reports, 4th quarter’s financial statements.
- The corporate governance factors are limited in the thesis
include: Board of Directors (BOD), Supervisory Board (SB)
and Internal Audit (IA).
5. Research methodology
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The author employed mixed research approach (embedded
design and explanatory design) including qualitative research
and quantitative research.
6. Novel contributions of the thesis
The thesis’ results have created new scientific and factual
contributions as follows:
Scientific
- Systemize and clarify general reasoning aspects in terms of
the quality of FRI and CG from previous studies in Vietnam
and the world. This content includes systematizing theoretical
background on the quality of FRI and CG, as well as, the impact
of CG on the quality of FRI. These results help future research
approach to theory on quality of FRI and CG in a systematic
and easier.
- In terms of methodology, the thesis has built the scale
which is tested conformity and reliability as well as their values.
The scale measure the quality of FRI towards useful for
economic decision making. These results help academic
researchers in Vietnam and subsequent studies used, adjust and
supplement to incrementally scale the value and reliability to
assess the quality of FRI of the listed companies in Vietnam on
a more complete.
Factual
The study results analyzed and evaluated the factors of FRI
quality and the characteristics of CG help policy makers,
legislators have insight in developing relevant legislation to
improve better on quality of FRI and CG, thereby, suited to the
requirements of international integration. Besides, the
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recommendations in the thesis helps listed companies
themselves complete contents of the information on financial
reporting to shareholders and perfecting corporate governance
to ensure quality of published financial reporting information.
7. Structure of the thesis
Except for the Introduction, the thesis consists of five
chapters, presenting in orders and including main contents as
follows: Chapter 1: Literature review on FRI and CG; Chapter
2: Theory of FRI and CG; Chapter 3: Research Methodology;
Chapter 4: Results and Discussion, Chapter 5: Conclusions and
Recommendations.
CHAPTER 1: LITERATURE REVIEW ON FRI AND CG
1.1 The domestic studies related to FRI and CG
- Financial reporting is not only the output of a set of
procedures, but the set of procedures themselves. The quality of
the output depends on the quality of each step taken to produce
it. Most of domestic studies focus various aspects of FRI in the
traditional sense. The authors study the current status of
Vietnamese accounting procedures and accounting standards,
through improve accounting procedures and to perfect
accounting standards towards integration of international
accounting standards. Research and approaches methods were
done mainly by qualitative methods.
- Regarding the impact on CG to FRI quality, as of the
present time, Vietnamese studies have little research the relationship between the quality of FRI and CG, which only
studied under different aspects related FRI and CG.
1.2 The foreign studies related to FRI and CG
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The foreign studies have evaluated the quality of financial
reports in a variety of measures. The different measures that are
contemplated as: Earnings management, Financial Restatement,
Financial Statement Fraud…, focus on information disclosed in
financial statements to assess the financial reporting quality.
Most of foreign studies investigated the CG characteristics
as: BOD, audit Committee (AC) and IA on the specific factors
of the quality of financial reporting, as: Earnings management,
Financial Restatement, Financial Statement Fraud, Voluntary
Disclosure...
CG characteristics, namely:
- BOD: board side, Board Independence, Board Accounting
- Financial Expertise, CEO Duality, Meetings’ Frequency…
- AC: AC Independence, AC Accounting - Financial
Expertise, Meetings’ Frequency…
- IA: The presence of the IA.
Research methods of foreign studies mostly used regression
analysis to assess the impact of CG on the quality of FRI.
1.3 The gap in research
Firstly, in Vietnam, there is no study of the impact of CG on
the quality of FRI, while the foreign studies only investigate the
impact of CG on the quality of FRI in other aspects.
Secondly, to assess the quality of FRI, the Vietnamese
studies focused on review accounting procedures and quality
accounting standards are set in Vietnam, through improve
accounting procedures and to perfect accounting standards
towards integration of international accounting standards. There
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is no any study the quality FRI in the direction of the useful
economic decision making.
Thirdly, while the domestic research mainly use qualitative
methods to measure the quality of FRI, the foreign studies using
quantitative methods to assess the impact of CG on the quality
of FRI.
From these gaps in the above research, in view of
inheritance and combining the previous research models, the
thesis will study the impact of CG on the quality of FRI in the
stock market in Vietnam.
Summary of chapter 1
CHAPTER 2: THEORY OF FRI AND CG
To answer the research question, the content of the chapter 2
presents the foundational theories and the conceptual
framework related to CG and FRI, particularly in this chapter
will present the following:
- Thesis presents 4 the foundational theories: decision-
usefulness theory, the theory of asymmetric information,
agency theory and behavioral theory of management.
- Besides, the thesis presents the concepts related to the
quality of FRI, thereby it will be basis for assessing the quality
of FRI, through to build scale the quality of FRI in chapter 3.
To measure the quality of FRI, thesis use the fundamental and
enhancing qualitative characteristics laid out in the conceptual
framework of the IASB and FASB (2010). In addition, the
thesis presents the concept and origin of CG and structure or
CG, this is a basis to build hypotheses about the relationship
between CG and FRI’ quality in the next chapter.
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- From the above researching theories related to FRI and
CG, the thesis build research model to answer the research
questions.
Figure 4: The research model
Board Independence
Board Accounting - Financial Expertise
CEO Duality
Quality of FRI
BOD Meetings’ Frequency
SB Independence
SB Accounting - Financial Expertise
IA presence
Summary of chapter 1
CHAPTER 3: RESEARCH METHODOLOGY
3.1 Research methodology
To achieve the research objectives and to answer the research
question, the thesis use the group the following methods:
3.1.1 The general approach: The general approach of the
thesis, the author employed mixed research approach
(embedded design and explanatory design) including qualitative
research and quantitative research.
3.1.2 Specific approach: Deductive approach, investigation
approach, inductive approach.
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3.1.3 Framework of thesis:
The combination of research methods, as described, to achieve
the research objectives, the steps of the thesis can be
summarized as the following major steps:
Step 1: Constructing scale of quality of FRI
To construct a measurement tool, we use Ferdy Van Beest
literature (2009), which defines financial reporting quality in
terms of the fundamental qualitative characteristics and the
enhancing qualitative characteristics (underlying decision
usefulness as defined in the IASB (2010). However, the scale of
Ferdy Van Beest is done in the developed countries. To ensure
construction of the scale is suitable for Vietnamese
environmental, the thesis using qualitative methods to interview
experts about the need of scale.
Step 2: Measuring quality of FRI and hypothesis Testing
This step, the thesis mainly uses quantitative methods to
measure the quality of FRI and investigates the level of impact
of these variables CG on the quality of FRI, in particular:
- Since the scale is built in step 1, thesis survey of 195
annual reports of listed companies based on Likert five point
rating scales to determine the total score of each company. The
original scale includes a conceptually-based 10 item index laid
out in the conceptual framework of the FASB (2010) and IASB
(2010). After the data is collected, the thesis assesses reliability
(Cronbach alpha) and value of scale (analysis EFA). Final
results showed that the official scale includes 16 elements.
Step 3: Using qualitative methods explain the results of the
regression model
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After obtaining the results from the regression model of step
2 on the impact of CG variables on the quality FRI variable,
thesis will interview experts on corporate governance in order
to explain and comment from results of regression models.
3.2 Study Design
3.2.1 Measurement of the quality of FRI of the listed
companies.
To construct a measurement tool, we use prior literature
which defines financial reporting quality in terms of the
fundamental and enhancing qualitative characteristics
underlying decision usefulness as defined in the FASB and
IASB, 2010. The fundamental qualitative characteristics (i.e.
relevance and faithful representation) are most important and
determine the content of financial reporting information. The
enhancing qualitative characteristics (i.e. understandability,
comparability and timeliness) can improve decision usefulness
when the fundamental qualitative characteristics are established.
The list of 19 items to measure, as follows:
Relevance is operationalized using five items referring to
predictive and confirmatory value: We measure predictive value
using three items: the extent to which annual reports provide
forward-looking statements (P1); the extent the annual reports
discloses information in terms of business opportunities and
risks (P2); company’s use of fair value (P3). Next to,
information has confirmatory value “if it confirms or changes
past (or present) expectations based on previous evaluations”.
We measure confirmatory value using two items: the extent the
reported results provide feedback to users of the annual report
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as to how various market events and significant transactions
affected the company (P4); the extent the annual report contain
information concerning divisions (P5).
Faithful representation: To faithfully represent economic
phenomena that information purports to represent, annual
reports must be complete, neutral, and free from material error
(IASB, 2010: 18). We measure faithful representation using five
items: the extent valid arguments provided to support the
decision for certain assumptions and estimates in the annual
report (T1); the extent the company base its choice for certain
accounting principles on valid arguments (T2); the extent the
company, in the discussion of the annual results, highlight the
positive events as well as the negative events (T3); The
disproportion in earning between before and after audit (T4);
The type of auditors’ report is included in the annual report
(T5); the extent the company provide information on CG.
Understandability: 3 items: Classified and characterized
information refers to how well-organized the information in the
annual report is presented (H1); the amount of tabular or
graphic formats (H2); the explanation of glossary (H3).
Comparability: 4 items: To what extent do the notes to
changes in accounting estimates explain the implications of the
revision? (S1); to what extent do the notes to changes in
accounting policies explain the implications of the change?
(S2); to what extent does the company provide a comparison of
the results of current accounting period with previous
accounting periods? (S3); to what extent does the company
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presents financial index numbers and ratios in the annual
report? (S4).
Timeliness: 1 item: The amount of days from the end of the
financial year to the date of announcement (K).
The thesis use a five point rating scales to assess the scores
on the items. This process results in a score between 1 and 5 for
all items: 1 indicating a poor score, while an outcome of 5
implies excellence.
3.2.2 Hypotheses Development
From the research model is described chapter 2, the thesis
build hypotheses to consider the impact of the factors CG on the
quality of FRI, as follows:
H1: The independence of the board of directors is positively
related to the quality of FRI among listed companies.
H2: CEO duality is negatively related to the quality of FRI
among listed companies.
H3: The accounting-financial expertise of the board of
directors is positively related to the quality of FRI among listed
companies.
H4: The number of board of directors meeting positively related
to the quality of FRI among listed companies.
H5: The independence of the Supervisory Board is positively
related to the quality of FRI among listed companies.
H6: The accounting-financial expertise of the Supervisory
Board is positively related to the quality of FRI among listed
companies.
H7: The presence of the internal Audit is positively related to
the quality of FRI.
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Moderating variables:
Besides examining the impact of the seven independent
variables in CG on the quality of FRI, the thesis uses two
moderating variables: the size of the company and the
proportion of the state-owned capital in the charter capital of the
company.
Company size variable
H8a: the bigger companies become, the more quality or FRI
they are.
H8b: The impact of CG on the quality of FRI is stronger in
companies with larger size.
The proportion of the state-owned capital in the charter
capital
H9a: The companies with higher proportion of the state-owned
capital in the charter capital, the lower quality of FRI they are.
H9b: The impact of CG on the quality of FRI is stronger in
companies with lower proportion of the state-owned capital in
the charter capital.
3.2.3 Regression Model
In order to establish a correlation among the level of FRI and
CG characteristics, this thesis uses regression analysis while the
dependent variable is the quality of FRI and independent
variables are seven the CG characteristics mentioned above.
The model is built as follows:
CLBCTC = (cid:2236)0 + (cid:2236)1ĐLHĐQT + (cid:2236)2KNCD + (cid:2236)3CGHĐQTĐL + (cid:2236)4SLCH + (cid:2236)5ĐLBKS + (cid:2236)6CGBKS + (cid:2236)7KTNB + ei.
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3.2.4 Description of data and information collection
methods
The Source of data to collect is the listed company in HOSE and HNX. At 31st December, 2012, there are 297 enterprises in HOSE and 367 in HNX. However, in order to conform to
conditions comparable data [S3], sample is limited companies
established before 2008. There are 196 companies. In the
process of collecting information, there is a company in HNX
without collecting data. Thus, the final sample for the study is
randomly selected from the 195 companies listed on the HOSE
and HNX, namely: 107 companies in HOSE, 88 companies in
HNX. Sources being used in this regard were the official data
published by companies listed on the HOSE, namely: the
Annual Report (2012), Corporate Governance Report (2012). The documents obtained from the website: www.vietstock.vn.
3.2.5 Methodology of the quality of FRI
To evaluate quality of FRI base on 19 factors, the thesis did
in two steps. Step 1, the author conducted observations of
relevant documents (annual reports and 4th quarter financial
statements) to score each factor under Appendix 3. To base on
"Interpretation" and "Recognition" columns in Appendix 3, the
author uses a five point rating scales to assess the scores on the
items. To reduce the subjectivity in the process of scoring, the
author proceeds to step 2. Step 2, the author scores the
qualitative factors such as: P1, P2, P4, P5, T3, T6 and H1. Scoring of 2nd step is independent of 1st step, then, comparing with the 1st score. If there is a difference between the two steps,
the authors will review each element to obtain the final score.
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3.3 Testing the reliability and value of the quality of FRI
scale.
3.3.1 Testing the reliability of the scale by Cronbach alpha
In the proposed research model, to measure the factors that
make up the quality of FRI, the authors have proposed 19
factors. The method of quantitative research is done in this
research step. Using Cronbach alpha coefficient tests the
reliability of the scales which measure the concepts in the
research model. After assessing the reliability of scale by
Cronbach alpha, the scale removed 3 variables: T4, S1 and S2.
Thus, the official scale of the quality of FRI includes 16 factors.
Using a five point rating scales, the total of score which
company achieved is in distance of 16 to 80. From this scoring
approach, the thesis proposed the level of quality of FRI
according to 5 levels: Excellent: 68-80; Good: 55-67; Medium:
42-54; Weakness: 29-41; Bad: 16-28.
3.3.2 Testing the value of the scale
After having assessed the reliability in Section 3.3.1, the
scale will be test the value of the scale by exploratory factor
analysis (EFA). To test the value of the scale, it should consider
three important attributes in the result of EFA: (a) the amount of
factors to be extracted (b) Factor Pattern and (c) Total Variance
Explained. The results showed that the scale is valuable.
3.4 Evaluating the suitability of research model
3.5 Testing multicolinearity
3.6 Testing heteroskedasticity
3.7 Testing of residual standard distribution
3.8 Testing linear association hypothesis
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The tests from section 3.4 till 3.8 showed that the results are
suitable regression model.
3.9 Qualitative methods
As mentioned in section 3.1.1 of Chapter 3 of the thesis, the
general approach of the thesis, the author employed mixed
research approach (embedded design and explanatory design)
including qualitative research and quantitative research.
Accordingly, qualitative methods are done with the aim to
affirm the need for the quality of FRI and to explain the results
of regression analysis. To perform a qualitative method, the
thesis use two the questionnaires, as follows:
- The questionnaire of FRI includes 16 questions. The
purpose of this questionnaire is to confirm the suitability of the
factors that make the quality of FRI in Vietnamese
environmental. Participants that discussed directly in the study
are 8 experts, who have knowledge and experience in the fields
of accounting, auditing, finance, securities analysts, investors,
disclosure …
- The questionnaire of CG includes 5 questions. The purpose
of the questionnaire aims to explain the results of testing the
hypotheses relating to the characteristics of corporate
governance. Then, it is the basis for discussion in chapters 4 and
orienting recommendations to be presented in Chapter 5 of the
thesis. Participants that discussed directly in the study are 4
experts, who have knowledge and experience in the fields of
enterprise law, CG, bard of director members, chief of
Supervisory Board.
Summary of chapter 3
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CHAPTER 4: RESULTS AND DISCUSSION
4.1 The results of the status of the quality of FRI and the
impact of CG on the quality of FRI of listed companies on
Vietnamese stock market
4.1.1 The results of the status of the quality of FRI
The results showed that the average score of the quality of
FRI 195 listed company's fiscal year 2012 was 35.9846, while
the lowest score was 20 and the highest is 66. With an average
of 35.9846 ≈ 36, less 4 points smaller than the standard average
of the scale are 30.
On the other hand, through quality classification, shows only
18 companies were passable, 19 firms averaged the remaining
158 companies were weak, bad, equal to 81.1% of the research
sample.
General conclusions, the quality of FRI of listed companies
in Vietnam is below average.
4.1.2 Results of hypothesis testing and regression model
Table 4.8, the result of analysis shows that the significance
of independent variables as: DLHDQT, CGHDQTDL, SLCH,
CGBKS and KTNB is consistent because sig. level is less than
0.05, so these variables have an impact on the dependent
variable CLBCTC. Two independent variables: KNCD and
DLBKS have sig level > 0.05, so these variables have no impact
on the QFR. Factor of the presence of the financial expertise of
the board of directors (CGHDQTDL) have the greatest impact
on the QFR coefficient (cid:2010) by 0.389. The level of impact of CG
on FRI decreased respectively KTNB, CGBKS, DLHDQT and
SLCH.
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The equation shows the quality of FRI in accordance with all
the independent variables of the characteristics of corporate
governance are:
CLBCTC = 26,236 + 14,894DLHĐQT – 1,129KNCD +
0,231SLCH – 0,072ĐLBKS + 9,867CGBKS +
7,986KTNB + 12,004CGHĐQTĐL.
Unstandardized
Coefficients
Standardized Coefficients
B
Beta
Model 1
(Constant) DLHDQT KNCD
26.236 14.894 -1.129
Std. Error 1.052 3.738 .804
.193 -.051
t 24.950 3.984 -1.403
(Sig.) .000 .000 .162
SLCH DLBKS CGBKS KTNB CGHDQTDL
.231 -.072 9.867 7.986 12.004
.080 1.333 2.239 1.178 1.512
.107 -.002 .197 .287 .389
2.883 -.054 4.407 6.777 7.941
.004 .957 .000 .000 .000
Table 4.8: Regression Results
4.1.3 Moderating variables:
4.1.3.1 Company size
Company size affect to the quality of FRI
Results showed that among different sized groups, the
quality of FRI is also different, in this case the company has the
size the greater the quality of FRI higher.
Company size affect to the level of impact of CG on the
quality of FRI
For CG variables showed that most large-scale companies
the corporate governance variables are the level of impact of
CG on the quality of FRI stronger with a smaller company size.
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4.1.3.2 The proportion of the state-owned capital in the
charter capital
The state-owned capital affect to the quality of FRI
Results showed that among different the proportion of the
state-owned capital groups, the quality of FRI is also different.
Results of this analysis showed that the company had no state-
owned capital groups have a higher quality of FRI group
companies have ratios above 50% state-owned capital.
The state-owned capital affect to the level of impact of CG
on the quality of FRI
Results showed that the state-owned capital enterprises over
50%, almost the CG variables do not correlate with the quality
of FRI, except two variables DLHDQT and KTNB, this means
that these companies have weak CG signs. The state-owned
capital enterprises under 50%, the correlation between CG
variables with the dependent variable has similarities without of
moderator variable. In this case, the state-owned capital
enterprises with less than 50%, the CG variables have impact on
the quality of FRI.
4.1.4 Testing fundamental qualitative characteristics
Relevance
The result of analysis shows that the significance of
independent variables as: DLHDQT, CGHDQTDL, SLCH,
CGBKS and KTNB is consistent because sig. level is less than
0.05, so these variables have an impact on the dependent
variable relevance. Two independent variables: KNCD and
DLBKS have sig level > 0.05, so these variables have no impact
on the relevance.
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Faithful representation
The result of analysis shows that the significance of
independent variables as: DLHDQT, CGHDQTDL, SLCH,
CGBKS and KTNB is consistent because sig. level is less than
0.05, so these variables have an impact on the dependent
variable Faithful representation. However, the difference of
above conclusions is the variable KNCD negatively related
Faithful representation characteristic with sig = 0.10. This implicates that in companies with CEO duality is lowly faithful.
4.2 Conclusions and causes
The status of the quality of FRI
From above analyses showed that the majority of listed
in Vietnam disclosure
information on annual companies financial reporting to comply with state law, namely the 52nd circular of the Ministry of Finance rather than towards the
usefulness of information for users. Annual reports of listed
companies are less interpretation and analyses, publishing little
information. The main reason, according to expert opinion is
due: enterprises only present upon request, to do not want to
publish, without knowledge of the disclosure and weak
oversight mechanisms.
The results of the status of the impact of CG on the quality
of FRI
Combining with the regression analysis, the authors
conducted in-depth interviews of CG experts. The results
showed that the quality of FRI of listed companies in Vietnam
is below average. When considering the relationship between
CG and the quality of FRI of listed companies indicates that the
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mechanisms of the listed companies is built ineffective, as
follows:
Board of directors (BOD)
The independence and professional ability of the BOD
- The proportion of independent members in the board of
directors is low.
- Many listed companies maintain CEO duality
Duty of BOD
- In the BOD, no member monitor and oversight the process
of preparing and disclosure FRI.
- Activities of the BOD in overseeing the process of
preparing and disclosure FRI are ineffective.
- The annual report have not adopted of BOD before
disclosure yet.
Resource information of the BOD
The duty of each Board member is done through meetings.
However, the Board members have not enough information
from the Executive Board on the activities related to the process
of preparing and disclosure FRI, such as: maintain and improve
the internal control system as well as non-financial information
related to the operation of the business.
Supervisory Board
The independence of Supervisory Board
In the listed companies, Supervisory Board is not truly
independent, the main cause are:
- Method of electing members of the Supervisory Board in
current law.
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- The proportion of independent members in the Supervisory
Board is low.
- In Circular 121, the provisions of the independence of the
supervisory board are not cover.
Duty of Supervisory Board
- The duty of the Supervisory Board focused on financial
data, not really interested in the non-financial information.
- There is no monitoring to plan as well as the audit process
of the independent audit firm.
- Activities of the Supervisory Board are ineffective and
cautious.
- No monitoring activities of the Board of directors and the
Executive Board relating to the preparation and disclosure of
financial reporting.
Internal Audit
Most companies are not interested in the activities of the
Internal Audit department, so the number of listed companies
having the Internal Audit department is very little.
Summary of chapter 3
CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS
5.1 Conclusions
The study results showed that the quality of FRI of listed
companies in Vietnam is below average.
Results of regression analysis showed that most of the CG
variables have impacted on the quality of FRI. The results are
consistent with the studies in the world. Only the independence
of the Supervisory Board is no correlation with the quality of
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FRI. According to experts, this result is due to Supervisory
Board is not truly independent and powers.
Besides, the research results show that the quality of FRI and
the impact of CG on the quality of FRI are influenced of the
size of the company and the proportion of the state-owned
capital in the charter capital.
5.2 Recommendations
5.2.1 Recommendations of enhancing the quality of FRI
The listed companies, in Vietnam, now are mandatory
disclosure under Circular 52. The quality of FRI is assessed on
the basis of the presented information in this regulation.
Although, the information requirements of listed companies
announced in Circular 52, include the financial information as
well as non-financial consistent with international practice, it is
only suggestive. Enterprises need to more disclosure and
interpret non-financial information.
5.2.2 Recommendations of strengthening CG to enhance the
quality of FRI
To propose specific recommendations for strengthening
corporate governance is to strengthen the characteristics of each
factor affecting the process of preparing and disclosure FRI
through enhanced duties, independence, powers, responsibilities
and the prudence of each CG factors. These recommendations
aim to effectively perform the role of each factor to help the
Executive Board will be established and announced towards the
recommendations thereby improving the quality of financial
reporting information set out above.
5.2.3 For the listed companies
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- The listed company should develop regulations preparing,
disclosure as well as the form and content of FRI and it should
be regularly assessed and improved to conform to changes in
the needs of the user.
- Self-evaluation of the quality of FRI
- Building good CG is the responsibility and culture of each
company.
5.2.4 For governing Bodies
- Professional associations: training on disclosure FRI in in
annual reports and good CG practices.
- Stock Exchanges to evaluate the annual reports of the
enterprises are not satisfactory, to gradually improve the overall
quality of annual reports for listed companies, including the
provisions on sanctions.
- The State Securities Committee: adjusting regulations on
CG, to strengthen supervision and sanctions.
5.2.5 Independent audit firm
In addition to providing financial statement audit services, in
the future, the independent auditing firm to provide assurance
services to assess the reasonableness of the non-financial
information presented in the annual reports.
5.3 The study limitation and further research
5.3.1 The study limitation
- The scale of the quality of FRI is only valid in the present.
- While trying to reduce the subjective factor, surely
inevitable errors in the process to score factors of information of
each company listed, especially the quantitative factors.
- Research sample of thesis is small.
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- CG in Vietnam at the present time is just beginning, so to
see the interaction of CG characteristics to the quality of FRI is
unclear.
5.3.2 The further research
- It is should detailed scale for each quality characteristics of
the FASB and IASB. The details of scale will help to score each
factor being objective and accurate.
- It takes at least two qualified participants for scoring.
- The CG characteristics should be able to expand more than
7 variables.
