Hoạt động Công bố thông tin phục vụ công tác quan hệ Nhà đầu tư và Đề xuất thực hiện tại Ngân hàng TMCP Đầu tư & Phát triển Việt Nam (BIDV)

VIETNAM NATIONAL UNIVERSITY, HANOI
SCHOOL OF BUSINESS




TRAN TRUC QUYNH

DISCLOSURE OF INFORMATION
&
THE CASE STUDY OF JOINT STOCK COMMERCIAL BANK FOR
INVESTMENT AND DEVELOPMENT

Major: Business Administration
Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisor: PhD. Tran Doan Kim


Hanoi - 2012
vi

TABLE OF CONTENT

ACKNOWLEDGEMENTS i
ABSTRACT ii
TÓM TẮT iv
TABLE OF CONTENT vi
LIST OF TABLE ix

LIST OF FIGURES x
INTRODUCTION 1
1. Research methodology 1
2. Significant 5
3. Delimitation 5
4. Disseminations 5
5. Follow-up 5
6. Thesis structure 7
CHAPTER 1: LITERATURE REVIEW 8
1.1 Definition Investor Relations 8
1.1.1 Definition 8
1.1.2 Function of Investor Relations 9
1.1.3 The correlation between IR (Investor relations) and PR (Public relations) 12
1.2 Definition of disclosure 13
1.2.1 Definition 13
1.2.2 Roles of disclosure on stock market 15
vii

1.3 Principle of disclosure 19
1.3.1 Accuracy, fidelity and sufficiency 20
1.3.2 Disclosing information promptly and regularly 21
1.3.3 Regulation Fair Disclosure (Reg FD) 22
1.4 An overview of disclosure on Vietnam’s stock market 23
1.4.1 Disclosure reality 23
1.4.2 The causes of violations 26
1.5 The case of disclosure activity at China Construction Bank 28
1.5.1 Overview of China Construction Bank 28
1.5.2 Empirical case of disclosure activities at China Construction Bank 29
CHAPTER 2: AN OVERVIEWOF DISCLOSURE ON BIDV 33
2.1 About BIDV 33

2.1.1 Overview of BIDV 33
2.1.2 The process of formation and development 34
2.1.3 Organization Structure 36
2.2 Position of BIDV in the financial market 39
2.2.1 The leading bank in project and enterprise financing 39
2.2.2 Retail banking - Multichannel and modern distribution network 41
2.2.3 Expansion of international investment and being a reliable counterpartner of
international financial institutions 42
2.2.4 The leading bank in transparency and quality management 42
2.2.5 The first bank in implementing the policies of the Party and the Government,
and the social security tasks 43
2.3 Disclosure of information at BIDV 44
viii

2.4 Assessment on disclosure activities at BIDV 46
2.4.1 Description of the Research process 46
2.4.2 Research findings 49
2.4.3 Depth interview result 60
CHAPTER3: RECOMMENDATIONS AND ACTION PLANS TO IMPROVE
DISCLOSURE ACTIVITY AT BIDV 63
3.1 Recommendations to improve disclosure activity at BIDV 63
3.1.1 Developing Investor Relations Department 63
3.1.2 Setting up Information Policy of BIDV 65
3.1.3 Standardizing the internal disclosure process 65
3.1.4 Building database and processing false information 67
3.1.5 Utilizing the role of spokesperson 69
3.1.6 Building website for investors (IR portal) 69
CONCLUSION 76
REFERENCES 77
APPENDICES 79

ix

LIST OF TABLE

Table 1.1: Comparison between IR and PR 12
Table 2.1: BIDV process of formation and development 34
Table 2.2: Percentage of respondent survey 49
Table 2.3: Assessment on content of information disclosed 51
Table 2.4: The level of interests in financial reports 52
Table 2.5: The level of interests in non- financial information 55
Table 2.6: Assessment on BIDV website (Investor Relation portal) 59
Table 2.7: Comparing the website for investors 71
Table 2.8: The action plan timetable 74
x

LIST OF FIGURES

Figure2.1: The organization chart of BIDV 36
Figure 2.2: BIDV Key Strengths 39
Figure 2.3: Financial capacity of BIDV and other banks 40
Figure 2.4 : The information flow and reporting channels outside 45
Figure 2.5: The research process 47
Figure 2.6: Assessement on time of disclosure at BIDV 50
Figure 2.7 : Assessment on content of information disclosed 51
Figure 2.8: The level of interests in financial reports 53
Figure 2.9: Quality of BIDV’s financial reports 54
Figure 2.10 : The level of interests in non- financial information 56
Figure 2.11: The level of interests in non-financial information 57
Figure 2.12: Means to get BIDV’s information 58
Figure 2.13: Assessment on BIDV website (Investor Relation portal) 59

1

INTRODUCTION

The disclosure of information is vitally important for evaluation of a company’s
progress by its shareholders and potential investors. Such disclosure helps
companies to attract investment and to remain trustworthy. Insufficient or
inaccurate information about a company can hinder the successful development of
its business.
Shareholders and investors require regular access to reliable information, in
particular to control the management bodies of the company and make informed
decisions regarding the evaluation of its activities. On the other hand, it is very
important to make sure that the information disclosure requirements do not act
against the company's interests and that no confidential information is disclosed,
since it may harm the company. However, all restrictions related to disclosure must
be subject to strict regulations.
As a bank which has just completed IPO and become a public firm, BIDV needs to
follow the law of corporate disclosure. However, for the last few months, disclosure
at BIDV has still been random and inconsistent when releasing information to
investors and the press. Therefore; BIDV needs to have a special department to
fully understand the law of disclosure as well as to build a professional and
effective disclosure process in order to maximize the benefits for BIDV’s
shareholders.
Motivated by the practical needs mentioned above, the research “Disclosure of
Information & The case study of Joint stock commercial bank for investment
and development” bears a practical meaning to the joint stock corporates in
Vietnam in general and to BIDV in particular.
1. Research methodology
Both qualitative and quantitative approaches are used to answer the research
questions.

2

For the quantitative methods, the survey collected and measured data using a
logical and critical approach
Qualitative approach is more subjective in nature than quantitative approach
and involves examining and reflecting on the less tangible aspect of a
research subject, e.g. values, attitudes, perceptions. Qualitative research
involves analysis of data such as words (e.g., from interviews), pictures (e.g.,
video), or objects (e.g., an artefact). Followings are some features of a
quantitative research:
- The aim is a complete, detailed description.
- Researcher may only know roughly in advance what he/she is looking
for.
- Recommended during earlier phases of research projects.
- The design emerges as the study unfolds.
- Researcher is the data gathering instrument.
- Data is in the form of words, pictures or objects.
- Subjective - individual’s interpretation of events is important, e.g.,
uses participant observation, in-depth interviews etc.
- Qualitative data is more 'rich', time consuming, and less able to be
generalized.
- Researcher tends to become subjectively immersed in the subject matter.
Qualitative research method, the common method business study, was based
on adequate assumptions, methods and data to draw suggestions and
conclusion. . Quantitative approach is on collecting and analyzing numerical
data, it concentrates on measuring the scale, range, frequency etc. of
phenomena.
3

Quantitative approach is one in which the researcher uses positivistic

methodology to develop knowledge (e.g. cause and effect, test a hypothesis
or a theory). Quantitative research involves analysis of numerical data. For
this research, a quantitative survey will be conducted. Followings are some
features of a quantitative research:
- The aim is to classify features, count them, and construct statistical
models in an attempt to explain what is observed.
- Researcher knows clearly in advance what he/she is looking for.
- Recommended during latter phases of research projects.
- All aspects of the study are carefully designed before data is collected.
- Researcher uses tools, such as questionnaires or equipment to collect
numerical data.
- Data is in the form of numbers and statistics.
- Objective seeks precise measurement & analysis of target concepts,
e.g., uses surveys, questionnaires etc.
- Quantitative data is more efficient, able to test hypotheses, but may
miss contextual detail.
- Researcher tends to remain objectively separated from the subject matter.
In this study, the research questions will be used as the guidelines for the research
processes.
1.1 Research purpose
The purpose of this research is to investigate the disclosure activity at BIDV.
Therefore the main research question is:

How is Investor Relations and disclosure of information activities at BIDV
4

To clarify the research question, the research will analyse the following two sub-
research questions:
1. How do investors assess the disclosure of information at BIDV?
2. Which information would investors like to know?

In realizing its aim, the study will specifically focus on: Firstly, the Bank needs to
evaluate the activity of IR function, especially the disclosure of information to make
sure it follows lawsuit and meets the needs of investors during the very first months
of transforming into a public firm. Secondly, the Bank needs to research to
understand more about the law requirements and the needs of the investors
regarding disclosure in order to prepare for the listing process of BIDV on the
securities market.
1.2 Research approach
Inductive and deductive research approaches are considered two general approaches
in business research in general. However, the research process is a continuous and
on-going process which combines the empirical observation, theoretical
interpretation and exploration. Therefore, this study employs the abductive research
method that takes the advantages of both deductive and inductive approach and
combines them.
The author started with empirical observations and searches of academic literature.
However, the author realized that most research and articles studied were focus on
Investor Relations activities. There are few academic articles or research studies
disclosure of information. To the best of my knowledge, there is no literature which
covers professional disclosure activities, especial in banking industry.
Therefore, beside many empirical observations, the author interviewed some experts
in other banks and some colleagues in the IR department; and asked them to help to
provide information about workflow of IR and disclosure practices in other
countries.
5

2. Significant
By viewing the theory and the practice of Investor Relations and Disclosure activity,
this research benefits BIDV in recommendation to building a professional and
effective disclosure of information process and improve the qualitative of Investor
Relations of BIDV. From that increase invisible value of the bank and attract more

potential investors.
3. Delimitation
Firstly, the research focuses mainly on the disclosure activity in particular and
Investor Relations in general.
Secondly, because of time and relationship limitation, the research is limited in the
sense that small scale of sample in interview and questioning. Geographic distance
is one of the reasons that email survey was chosen.
Thirdly, BIDV has become a large-scale public company and been going to listed
company. Therefore, the research is limited for the public company.
Finally, to the best of my knowledge, this is the first study of disclosure of
information. Consequently, the research limited by the lack of available academic
research on the subjects related to the research questions.
4. Disseminations
The result of research will useful for not only disclosure activity of BIDV in
particular but also for other companies which are going to be public and listed on
stock market.
The finding in theory will help public and listed company to understand the
practices and legal requirement of disclosure of information. Therefore, he research
finds may serve as a source of references for concerned agencies to improve their
understanding about information disclosure as well as the quality of disclosure
activities at their own banks or listed companies.
5. Follow-up
6

Further study will be taken on improvement of implementation Investor Relations
activity in general and disclosure of information in particular when BIDV become a
listed company.

7

6. Thesis structure

Chapter 1: LITERATURE REVIEW

1.1 Definition of Investor Relations
1.2 Definition of Disclosure
1.3 Legal requirement of Disclosure
1.4 An overview of disclosure on Vietnam
stock market
1.5 The case of disclosure activity at China
Construction Bank


INTRODUCTION
1. Research methodology
2. Significance
3. Delimitation
4. Disseminations
5. Follow-up
6.Thesis structure

Chapter 2: AN OVERVIEW OF
DISCLOSURE AT BIDV

2.1 About BIDV
2.2. Position of BIDV in the financial market
2.3 Disclosure of information activity at BIDV


Chapter 2: RECOMMENDATIONS AND

ACTION PLAN TO IMPROVE
DISCLOSURE ACTIVITY AT BIDV

3.1 Recommendations
3.2 Action plan

CONCLUSION

8

CHAPTER 1: LITERATURE REVIEW

1.1 Definition Investor Relations
1.1.1 Definition
In shareholding companies, the practice of IR is widely applied as an effective
strategy for companies to build tight relationships with their stakeholders in general
and investor communities in particular.
According Louis M.T Jr., President and CEO of National Investor Relations
Institute (NIRI)
1
“Investor Relations (IR) is a strategic management responsibility
that integrates finance, communication, marketing and securities law compliance to
enable the most effective two way communication between a company, the
financial community, and other constituencies, which ultimately contributes to a
company’s securities achieving fair valuation”.

In addition, Marston and Straker
2
defined IR as the communication of company
information to investors, financial communities, analysts. Rao and Sivakumar

3

referred to IR as a strategy of corporate marketing activity that combines financial
disciplines and communication. The definition of NIRI emphasized the “two-way”
communication between shareholding companies and public, rather than merely
providing company information in one direction.
IR
professionals
with extensive
relationships
and a wide range of
capi
tal markets
know how
can extend the reach to find the right investor
well
beyond the
company’s home
shores.


1
NIRI, Definition of Investor Relations, National Investor Relation Institute (NIRI), view 24
th
Dec 2012
<htto:// www.niri.org>
2
Marston,C. and Straker,M.(2003), Investor Relations: a European survey, Corporate Communications: An
International Journal, p.82-93
3

Rao, H. and Sivakumat,K.(2009), Institutional sources of boundary spanning structures: the establishment
of investor relations department in the Fortune 500 industrials, Organization Science, p.27-32
9

1.1.2 Function of Investor Relations
Considering the IR performance, some people may think that IR is a form of
marketing activity. However, the word “marketing” is confusing word in this case.
According to Anne Guimard
4
, the main role of IR is to persuade investors that a
dollar invested in your company will appreciate faster than a dollar invested in any
other company. This contrasts with normal marketing activities, in which customers
are simply buyers, the customers in IR activities include sellers, buyers, brokers,
analysts or any intermediary agents involved in the stock transaction process. IR has
many following function:
Disclosure
There are many different types of investor with many different objectives. Some
want growth and look for stocks with high returns and earnings momentum. Other
seek value and purchase stock they feel are undervalued and underfollowed by
Stock market. Another type of investor wants income, like stocks with a dividend.
Regardless of the differences, most investors take the information they are given
and run it through quantitative models. Then they compare the results to other
companies in the same industry and make an investment decision based on these
relative quantitative indicators. This is basic information easily culled from a
company’s financials, which must be disclosed on its income statements, cash flow
statements, and balance sheets. Anyone can get these and do their modelling.
No public company operates in a vacuum. In fact, many people, including
regulators and competitors, generate opinions that can affect a company’s position
in the capital markets. Every decision a company makes, whether financial,
strategic, or operational, ripples into the capital markets and affects the stock price,

the competitive position, or the public’s perception. Anticipating and assessing the
impact of corporate actions on the capital market, whether from an acquisition, a

4
Anne Guimard (2008), Investor Relations: Principles and International Best Practices of Financial
Communication, p.66-71

10

change in dividend policy, or a new product introduction, is the function of investor
relations. In most cases, the packaging and distribution of this information is
the main responsibility of investor relations, as IR is the filter through which all
financial communications come out of the company.
To conclude, IR plays the role as the driving function which is responsible for the
firm’s disclosure in accordance to the Laws, the Securities regulations and the
Disclosure regulations issued by the SSC. Moreover, besides disclosing information
complying with laws, the IR department is also responsible for to provide
information as requested by shareholders and investors. In order to fulfil this
responsibility, the IR department needs to ensure effective coordination with other
related functions to consolidate information as required, most of which concerns the
firm’s financial situation. This kind of information is always available since it is
essential to operate the firm’s business. However, as the focal information point, the
function needs to consider the following points:
 Ensure information consistency between different functions in the firm.
 Customize information to meet the needs of different stakeholders. For example,
to individual investors, information needs to be communicated in a clear easy to
understand way while to institutional investors, the information needs to be more
specialized and detailed.
 Coordinate with other functions that share similar responsibility such as PR
department to ensure the consistency in the information released to the public.

The responsibilities for disclosing information can be listed as below:
 Disclosing information in accordance with regulations.
 Managing web page for Investors.
 Composing reports, presentations, notifications and media messages concerning
investor relations.
 Participating in building and designing annual reports and news reports for
investors.
11

Maximize equity value
There are the intangibles, which is where IR needs to be at the top of its game. The
intangibles are the nuances of value, the managing of expectations and perception,
and the ability to define, deliver, and create a dialogue about a company’s financial
performance and position in its industry. In fact, intangibles are an important
component of maximizing value. Anywhere from 20 to 40 percent of a company’s
valuation is linked directly to these items. That’s a big piece of valuation pie, and
the job of IR is to help management maximize it and investors understand it.
Providing the necessary disclosures and information is one thing. Knowing what
stock market expects from a company and its management team is something else
entirely. The best IR professional are inside the brains of their investors, and think
like analysts and portfolio managers. By understanding valuation they can approach
analysts and money managers as peers and work hard to build trust.IR can direct
improve the 20 to 40 percent of a company’s valuation linked to factors outside of
financial performance and bolster market capitalizations while increasing exposure
and obtaining valuable third party validation. There is a science to valuation, but
there is also an art.
Share or stocks are special products representing the company’s value. When the
investor buys shares they expect the future value of the share to increase. Financial
reports and other disclosed information are important sources to evaluate share
price. However, any disclosures are based on mainly on historical information.

What an investor expects is not historical value but future value of share. Therefore,
IR activities are need to guide investors. Every decision ripples through the capital
markets. The sell-side, the buy-side, strategic partners, the media, regulators, and
the global community are important constituencies to be addressed by investor
relations. IR with capital markets know-how is invaluable to companies addressing
these constituencies and helps to maximize equity value.
12

1.1.3 The correlation between IR (Investor relations) and PR (Public relations)
The difference between IR and PR is that IR’s focus is domestic and international
investors while PR focuses on the majority of customers and the public who are
interested in the firm especially its products and services. However, the firm’s
actions affect both investors and the general customers. Therefore, they are called
stakeholders. Therefore, the operational synergy between the two functions is of
great importance in order to deliver legal and consistent messages to the public,
which includes investors, prospective customers and other stakeholders. For
example, when there is a piece of information that needs to be released, the PR
function will often want to release it quickly and widely while the IR function will
wait until the market is closed in order to avoid the volatility of the stock price
during the trading session, in which the investors have to be processing the
information. Similarly, since the recipients of the information are different group of
people, both the functions need to customize the approach depending on their
recipients. For example, in case there is the information that the firm’s product is
flawed or harmful to consumers, while consumers would like to know whether the
information is valid while investors’ concern would be what action steps the firm
would take to take control over the situation and make sure it would not negatively
affect the business.
Table 1.1: Comparison between IR and PR
Public relations department
Investor relations

Working with the General director to
build, promote and develop firm’s brand
and managing public relations
Assisting the General director in
disclosing information before, during
and after domestic and international
listed process
Providing directions, keeping track PR
activities on a regular basis of member
Driving synergy between related
functions at the head office and at
13

units.
member units to build database that is
specially used for disclosing information
to state agencies, investors, the media
and the financial community. Main
charge of building and maintaining
relations with state agencies, investors,
the media and the finance community.
Directly running functional activities to
build, promote and develop the brand of
BIDV
Directly in charge of managing
disclosure and organizing disclosure
events to release information to the
public, including state agencies,
investors, the media and the finance
community.

To conclude, if there is no clear and effective synergy and cooperation between IR
and PR departments, different versions of the information content can be release,
misleading the recipients, affecting the firm itself and even leading the legal
conflicts later on.
IR executives are expected to contact with reporters, especially those coming from
economics or finance magazines to build relations with them. Meanwhile, PR
executives are supposed to already establish good relations with the media as a
nature of their jobs. Therefore, utilizing this existing relation as well as the
experience from PR is an disadvantage the IR departments should capitalize
1.2 Definition of disclosure
1.2.1 Definition
As proven through many practical experiences, in order for the securities market to
operate effectively and stably, transparent disclosure is one of the fundamental
elements that need to be ensured. Information is also what investors based on to
14

evaluate and decide whether to buy or sell the stocks. If the information released on
the market is misleading or false, it will cause great fluctuations in the market and
provoke confusion and anxiety in investors, leading to sudden changes in the market.
As a result, these changes will cause crises to the financial market and negatively
affect the economy.
On the securities market, disclosure is an indispensable element that is compulsory
for firms to maintain credibility and fairness among investors. Listed organizations
need to implement disclosure activities promptly, accurately and in accordance with
law. Disclosure is a public regulation, which is considered the most fundamental
principle of the operation of the securities market.
Disclosure is a process in which entities participating in the securities market
promptly disclose accurate and reliable information on the activities of the market,
those that can impact the stock prices or investors’ benefits via means of
communication such as the media, organization issues or the SSC’s channels in

order to ensure the fairness of the stock prices and protect investors.
The entities that involve in the securities market include:
 The bond issuers
 Listed organizations
 Stock companies
 Fund management companies
 Stock investment companies
 State Stock exchange
 Stock exchange centres
There are two main methods of disclosure: direct disclosure and indirect disclosure.
Direct disclosure means that responsible organizations have the rights to disclose
information via public media channels and are obliged to report to administering
15

agencies or market operation agencies such as state securities commission, state
stock exchange or stock exchange centers.
Indirect disclosure means that organizations before disclosing information have to
transfer the information to administering agencies and market operation agencies so
that those entities can process the information before releasing to public via
communication channels of those agencies themselves or other public
communication channels.
1.2.2 Benefits of effective disclosure
To investors
Investors are one the most fundamental parts of the financial system. They are the
ones to both provide capital, the most crucial factor in the market and establish the
diverse relations in the market; for example relations between investors (law
makers) or between investor (listed companies and public companies). This had
contributed to making the market more complicated and diverse. They account for
the big part in the market together with other parts such as market maker, financial
institution and also the ones who take risks in allocating capita, implementing

investment activities in order to leverage the market to operate and develop. To
countries of which stock market is still primitive and is developing, the issue of
stockholders’ benefits and their confidence in the market is of great importance
because the majority of investors are small ones but the benefits come to the
minority, which are great investors. This leads to conflicts concerning benefits and
represent cost. That confidence has been challenged by the events of fraud
information, insider trading, non-transparent financial reporting which have existed
and might bring about certain consequences to the economy. Therefore, disclosure
can both benefits to investors and protect them, ensuring the fair treatment, reducing
agency cost and avoid conflicts of interest.
As corporate owners, investors have the rights to get access to information
concerning operations, stakes a well as long term development trend of the
16

company. Since information disclose comes only from spokesman, the conflicts of
interests are unavoidable. Besides the conflicts between listed companies and
investors, there are also those between small investors and large investors, corporate
director and the board of directors…Information transparency enables investors to
get more accurate information in order to evaluate the effectiveness of their
investment, avoid underlying risks in company operations (unreal income, falsified
financial statements through accounting tricks ). Besides, it also helps avoiding the
situation in which large shareholders might be informed more potential investment
opportunities thanks to advanced access to information.
Concerning brokerage activity, not only can investors decide whether they are
getting the optimal price but they can also avoid adverse brokerage fee. Information
transparency can also enable investors to get sufficient and valid information so that
they can supervise the quality of the transactions that have been made. By
comparing individual brokers and professional brokerage firms in term of final
outcome and cost, investors can make better investment decisions in the future.
To Public companies/ Listed Companies

Information transparency and disclosure plays a part in promoting long term
benefits for corporates. Mentioned here are the two most fundamental benefits:
Reducing cost of capital and enhancing company value. Those factors are
correlative.
Lowering cost of capital
Theoretically, poor liquidity and the gap between “buy” and “sell” brings
transaction fee burden to investors. In addition, discriminative treatment among
investors can make them turn their backs, resulting in the increase of cost of capital.
By actively promoting corporate business to the investors community, disclosure
can also help to reducing the cost of capital. Corporate can spend less money raising
capital if they their stocks become more well-known among investors. In another
sense, in case the market value of the stocks is lower than the intrinsic value,
17

disclosing information transparently will partly provide better understanding of
business to investors, by which will bridge the gap between market value and
intrinsic value and reduce the cost of capital
Enhancing corporate value
David Well
5
points out managers will possibly forgo many profitable investment
opportunities if they issue more stocks to raise capital without paying attention to
the issue of information asymmetry between the firm’s well-informed managers and
its less-informed investors.
The research of Yin R.R
6
indicates that information disclosure can impact the firm’s
value by influencing decisions of managers and change the cash flow allocation in
the future. Many researches based on theoretical approach suggested that companies
with higher level of transparency and better management can enhance their value

and reduce the amount of loss cause by the managers’ taking advantage of
information to gain benefits for themselves.
When implementing appropriate information disclosure, a listed company with high
business performance can promote its credibility, improving the stocks’ liquidity
and by that, enhancing the value of the companies, attracting more capital, utilizing
investment opportunities and increasing profit. As for companies that are in the
temporary struggling state, disclosing information on feasible projects and long
term development direction can help sustaining credibility from investors and by
that, overcoming the difficulties.
To the stock market
Transparent information encourages investors to join the market, improves liquidity
and helps to develop a more efficient stock market, ensuring the stability of the
stock market and capital market. Transparency enhances the information efficiency

5
David Well (2002), The Benefits and Costs of Transparency: A Model of Disclosure Based Regulation, p.
34-44.
6
Yin, R.R (2007), Case study of research in London, Safe Publications, Inc.
18

of the market, ensuring the fairness among investors, building confidence to the
market, encourage invests to be more active on the market and help them to make
better decisions and invest on a longer term. For example, there have been an
increasing number of institutional investors on the market because they are having
less concern about the risks of fraudulent transactions and misleading information.
This will improve the probability of successful investment.
Information disclosure can also partly mitigate the discriminative treatment problem
and enhance market liquidity by creating a fair and ethical market for all investors.
This information efficiency formulates two important effects:

 Firstly, when there is more information available on the market, it is more
difficult and costly to an investor who wants to have more information advantage
then the others. Therefore, there are very few investors who can afford this, which
means there is less chance of transaction with investors who have strong
understanding of the market.
 Secondly, more quality disclosure would reduce the changes within the firms,
which will reduce the information advantage that many investors might have.
Both the effects, together, will weaken the trend of increasing self-protection of
investors who have little information and by that, improving the market liquidity.
Once the market liquidity is enhanced and the market itself becomes more
appealing to investors, both the sides who publish and use information will enjoy
certain advantages. The investors, who utilize information, can proactively allocate
their capital sources while the list companies, who disclose information, have higher
chance to attract more sustainable source of investment capital with lower cost of
capital but higher effectiveness.
Apparently, when firm’s operation is transparently released, the valuation of the
firm is of higher accuracy. This means the capital is allocated to the right place and
thereby, improving efficiency of the market. However, we also need to accept that
19

information disclosure is effective only when investors have sufficient and proper
understanding and analyzing ability to utilize the information.
1.3 Principle of disclosure
While many listed organizations are aware of the importance of information
disclosure, they cannot disclose information randomly in term of format, content or
timing. Disclosing information appropriate has become an important custom and
ethic in business; as a result, there are certain criteria and principles that need to be
followed.
Listed and public company need to comply with the provisions in Circular
52/2012/TT-BC issued on 5

th
April 2012
7
with the following basic principles:
 A disclosure of information must be complete, accurate and prompt.
 A disclosure of information must be made by the legal representative of a
company or by an authorized person. The legal representative of the company shall
be responsible for the accuracy, promptness and completeness of information
disclosed by the authorized person.
 A disclosure of information must be made at the same time as a report on the
contents of disclosed information to the SSC (State Securities Commission of
Vietnam) and the SE (Stock Exchange) or the VSD (Vietnam Securities Depository)
 The date of disclosing information shall be the date on which the information
appears on the information disclosure media; the date of making a report on
information disclosure shall be the date on which the report is sent by fax or in the
form of electronic data (via email or the information technology system for
receiving reports), or shall be the date on which the SSC and the SE receives the
information disclosed in writing.
 The language used for disclosure of information on the securities market of
Vietnam must be Vietnamese. If the law stipulates the disclosure of additional

7
Circular 52/2012/TT-BC issued on 5
th
April 2012 by Ministry of Finance