Corporate governance and ownership on voluntary information disclosure case study for listed firms in ho chi minh stock exchange

UNIVERSITY OF ECONOMICS

ERASMUS UNVERSITY ROTTERDAM

HO CHI MINH CITY

INSTITUTE OF SOCIAL STUDIES

VIETNAM

THE NETHERLANDS

VIETNAM – NETHERLANDS
PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

CORPORATE GOVERNANCE AND OWNERSHIP ON
VOLUNTARY INFORMATION DISCLOSURE: CASE
STUDY FOR LISTED FIRMS IN
HO CHI MINH STOCK EXCHANGE

By
PHAN HOA THAO NGUYEN

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CTITY, October 2017


UNIVERSITY OF ECONOMICS

INSTITUTE OF SOCIAL STUDIES

HO CHI MINH CITY

THE HAGUE

VIETNAM

THE NETHERLANDS

VIETNAM – NETHERLANDS
PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

CORPORATE GOVERNANCE AND OWNERSHIP ON
VOLUNTARY INFORMATION DISCLOSURE: CASE
STUDY FOR LIESTED FIRMS IN
HO CHI MINH STOCK EXCHANGE
A thesis submitted in partial fulfillment of the requirement for the degree of
MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By
PHAN HOA THAO NGUYEN

Academic Supervisor:
VU VIET QUANG

HO CHI MINH CTITY, October 2017


DECLARATION
I certify that this thesis entitled “Impact of corporate governance and ownership on

Voluntary Information Disclosure of firms on Ho Chi Minh stock exchange (HOSE)”,
which is submitted by me for completing the degree of Master of Art in Development
Economics to Vietnam – Netherlands Programme (VNP).
I certify this thesis has not been submitted for any degree and all materials and
assistance in this dissertation have been acknowledged in the text.

Phan Hoa Thao Nguyen | Page i


ACKNOWLEGDEMENT

This thesis would not be completed without any assistance and instruction from
many people. Sincerely, I would like to give my acknowledgement to my supervisor,
friends, family because of their support and motivation for me during the time of
performing this research for completing Degree of Master of Art in Development and
Economics.
First of all, I would like to express my endless gratitude and thank to my
supervisor, Dr Vu Viet Quang. Thank to his instructions and motivation, I had many
useful advices for my thesis. His great generosity and enthusiasm encouraged me to
develop my thesis topic more persuadable and attractive. Despite of being busy, he
spent a lot of time explaining econometric model and data settling method to me. His
useful comments supported me improving thesis more qualified and effective.
Moreover, I am grateful to Dr. Truong Dang Thuy for his assistance in constructing
research design.
Next, I would like to express my thank to all friends at VNP. Spending a long
time together from the first day to the completion of the course, I learned a lot from
you about knowledge, spirit, assiduousness in studying. Beside that, I also want to
thank VNP officers for their support in my learning and studying at here.
Finally, I would like to express thankfulness to my parents, my brother and his
wife for their supporting in my life. My special thank comes to most important person

in my life, my husband, who has walked by my side, takes care of our baby that is
about to be born, and assists unconditionally for me to pursue my dreams.

Phan Hoa Thao Nguyen | Page ii


ABBREVIATIONS

CEO:

Chief executive officer

GMM:

Generalized Moment Method

HOSE:

Ho Chi Minh stock exchange

OLS:

Ordinary Least Square

SEM:

Stock exchange market

SOE:

State-owned enterprises

UK:

United Kingdom

USA:

United State of America

Phan Hoa Thao Nguyen | Page iii


TABLE OF CONTENTS

Declaration ................................................................................................................ i
Acknowledgement .................................................................................................... ii
Abbreviations .......................................................................................................... iii
Table of contents ..................................................................................................... iv
List of table .............................................................................................................. v
List of figures .......................................................................................................... vi
List of appendix....................................................................................................... vi
Abstract .................................................................................................................. vii
Chapter 1: Introduction ............................................................................................ 1
Chapter 2: Literature view and hypothesis development ......................................... 5
Chapter 3: Sample data and research methodology ............................................... 16
Chapter 4: Empirical results ................................................................................... 25
Chapter 5: Conclusion ............................................................................................ 47
References .............................................................................................................. 50
Appendix ................................................................................................................ 57

Phan Hoa Thao Nguyen | Page iv


LIST OF TABLE
Table 1: Definition and measurement of independent variables
Table 2: Descriptive statistic
Table 3: The regression result by OLS regression method in SOEs in 2010
Table 4: The regression result by OLS regression method in SOEs in 2013
Table 5: The regression result by OLS regression method in SOEs in 2015
Table 6: The regression result by OLS regression method in family-owned companies
in 2010
Table 7: The regression result by OLS regression method in family-owned companies
in 2013
Table 8: The regression result by OLS regression method in family-owned companies
in 2015
Table 9: The regression result by OLS regression method in block shareholders firms
in 2010
Table 10: The regression result by OLS regression method in block shareholders firms
in 2013
Table 11: The regression result by OLS regression method in block shareholders firms
in 2015
Table 12: The regression result by Pooled OLS method in SOEs, family-owned
companies, and block shareholders firms from 2010 to 2015
Table 13: The regression result by Fixed effect and Random effect method in SOEs,
family-owned companies, and block shareholders firms from 2010 to 2015
Table 14: The regression result by generalized moment method (GMM) in SOEs,
family-owned companies, and block shareholders firms from 2010 to 2015.

Phan Hoa Thao Nguyen | Page v

LIST OF FIGURES
Figure 2.1: Conceptual framework
Figure 3.1: Allocation of voluntary disclosure items in 2010
Figure 3.2: Allocation of voluntary disclosure items in 2013
Figure 3.3: Allocation of voluntary disclosure items in 2015

LIST OF APPENDIX
Appendix A: List of voluntary disclosure items

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ABSTRACT

Using final sample data of 237 publicly traded firms on HOSE for the study
period from 2010 to 2015, the paper investigates the relationship between corporate
governance and ownership to voluntary information disclosure in Vietnam.
Furthermore, to check significant impact of corporate governance, ownership structure
on voluntary information disclosure in Vietnam, the GMM regression is employed to
deal with endogeneity problems and the results provide empirical evidences of the
strong relationship between board size, family ownership, block share holders
ownership and voluntary information disclosure. Interestingly, the study finds that the
negative relationship between board independence and voluntary disclosure is
weakened in the presence of block shareholders, and the positive association of board
size and disclosure level is strengthened for firms with family ownership.

Keywords: voluntary disclosure, corporate governance, board leader structure,
board independence, board size, SOEs, family-owned companies, block shareholder

firms.

Phan Hoa Thao Nguyen | Page vii


CHAPTER 1
INTRODUCTION
1.1 Problem statement
Nowadays, the stock exchange market (SEM) becomes a channel mobilizing capital
effectively for firms to invest into interested project, produce and provide goods or
services. The Vietnamese SEM passes through unstable period. It may state that the
SEM takes an important role in actuating national economy. First, due to having SEM,
investing of idle capital becomes easier, accumulating capital is more abundant.
Second, SEM provides businesses a chance in order to use capital source more
effectively. Third, SEM is a tool in order to evaluate business and forecast the future.
Final, SEM provides a good forecast about business cycle in the future. The
Vietnamese SEM spent unstable periods as stock price fluctuates continuously. Evenly,
that fluctuation is not sometimes reasonable and not to be complied in accordance with
any rules. Therefore, many investors lack of exact information about market. There are
some reality problems existing on SEM for a long time are the swaying price, violating
disclosing information, and planting spy transaction… It is the time for government to
impose strong methods to disclose market.
The state owned enterprises dominated in Vietnam in the early 1980s. The Vietnam
economy has passed two periods of French War and American War influencing on
economic property form of enterprises from 1946 – 1975. After Southern liberation in
1975, there is a united combination between two of South and North region, Vietnam
had gone to building period for economy and society. Following this unifying, the
Vietnam economy had operated according to same custom, model of central planning
which had been adopted in North region was transferred to South region (Turner and
Nguyen, 2005). This development has created the central planning economy which

state ownership takes an important role as owning production means, agricultural coPhan Hoa Thao Nguyen | Page 1


operative, and economy has based on heavy industry (Ronnas and Sjoberg, 1991).
From the Doi Moi in 1986, the reform process had been applied for changing in
Vietnam. According to this scenario, the central planning economy had been moved to
market economy with many different sectors, collectivization, privatization, investment
and foreign trade had been allowed in this period (Turner and Nguyen, 2005). The
Ninth Party Congress has put the 10 years Economic – Social Development Plan with
the objective for decreasing poverty and raising growth which SOEs have occupied
important leading role in most of main sectors (Painter, 2003). The restructured
program is approved by government containing the capitalization and listing the SOEs
which exists agency relationship of shareholders and government. At the present, the
voluntary disclosure scenario of listed companies in Vietnam has been quite low in
comparison with other countries in South East of Asia as Singapore, Thailand,
Indonesia, Malaysia and Philippines. In the recent years, Vietnam economy has
encountered difficulties and challenges leading to disadvantages in business, reducing
production cost. Because of weak financial situation, the listed companies publish less
information and limit to provide internal situation to market. Hence, the activities of
disclosing corporate information have been decreased, especially information about
management board and control board. The corporate governance issues in Vietnam
need to overcome difficulties as poor and inaccuracy quality of financial statement,
shortage of financial supervision, centralization of shares, disrespect with shareholders,
… These are important objectives assisting the foreign investors to decide whether to
invest in Vietnam or not.
To develop strongly and stably, one of the most important things for SEM is
information disclosure and to be updated for shareholders and investors to make
decisions exactly in investing and owning business’s stock. Chakroun and Matoussi
(2012) defined the voluntary disclosure as declaration other information of corporation
Phan Hoa Thao Nguyen | Page 2

beside to obligatory ones disseminated by managers to shareholders. They also said
that voluntary disclosure is a tool for shareholders in order to check managers’
activities, preserve investors, and limit agency cost caused by asymmetric information
in operating business (see also Barac et al. 2014). Hence, a fundamental problem of
corporate governance is the generation of asymmetric information in relationship of
fiduciary - representative between owner and business manager. The owners – the
trustee – allot their investment capital to a manager – the representatives – run the daily
business of the enterprise. The manager will be paid remuneration corresponding to the
profits that companies bring back for the investor. However, the representatives often
have the advantage of information than the trustee. It is alerted that representatives tend
to exploit the advantage of this information to benefit themselves rather than for the
individual investor. Berle and Means (1932) examine about the agency theory which
creates many contradictory problems in benefit between shareholders and managers.
For companies where the owners run the business directly, there is no problem of
information asymmetry in relationship of delegator - representative. But with the
public shareholding company, this is a permanent problem because the ownership and
operating rights are separated from each other. Therefore, public companies often
require transparent information to protect investors. In the long term, the transparency
of information is also beneficial for the enterprises. If investors believe, businesses will
often be additional capital to develop and the firm value will be increased.
1.2 Problem objective
By controlling the determinants of voluntary disclosure of corporate information,
the managers may understand which ones have impact on disclosure of information.
Moreover, the analyzing corporate governance and disclosure also is necessary for
raising shareholder’s benefit, the result from that relationship will provide decisions for
leaders or regulators in corporation (Kelton and Yang, 2008). Thus, they would find
Phan Hoa Thao Nguyen | Page 3

the best solutions to raise and amend transparency or dissemination in order to
maximize firm value and shareholder’s profit.
1.3 Research question
The objective the paper would like to achieve is the finding impact of corporate
governance in state ownership, family ownership, and block ownership companies on
voluntary disclosure of information in the annual reports through data collected from
listed firms in HOSE. Hence, the research need to answer the questions “Does
corporate governance impact on voluntary disclosure under influencing of stateownership enterprises, family-ownership companies, and block-ownership firms?”
1.4 Research scope
The paper uses the data from firms listed on HOSE market. After eliminating
banks, financial companies, insurance firms and missed data firms, from 346 initial
listed firms on HOSE, the residual sample contains 237 firms used for researching. The
statistical estimating method and STATA are used in order to find out the relationship
of model.
1.5 The thesis structure
The research structure is constructed in five chapters, containing this introduction
chapter. Chapter 2 is the seeing theoretical frameworks and empirical evidences of
research problem. Chapter 3 displays the data collection and estimation model of
paper. Chapter 4 describes the result of analyzing regression model. Chapter 5
concludes the main problems, recommendation and limitations of research.

Phan Hoa Thao Nguyen | Page 4


CHAPTER 2
LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT

Agency is defined by Jensen and Meckling (1976) as a negotiated contract
between shareholders – owners of companies and managers of those companies which

are committed by shareholders to operate and control the company in accordance with
their request. Monitoring cost is paid for the managers as directors, general directors to
administrate firm’s activities and minimize damaged activities for the businesses.
Moreover, the managers are also paid bonding cost in order to ensure that
shareholder’s benefit which would be protected from manager’ activities and decisions
or shareholders would be paid indemnity for managers’ inexact activities. Finally,
residual loss arises as manager’s decision decrease shareholder’s benefit. On the whole,
Jensen and Meckling (1976) conclude that agency cost is total of monitoring cost,
bonding cost, and residual loss.
Beside to agency cost, another problem also existing in relationship between
shareholders and investors is information asymmetry. Information is always considered
as a valuable asset to all investors on SEM. It may be a large advantage if the investors
catch quick and accurate information before other investors. Due to suppressing
information strategy of businesses, thus to catch good information in quantity and
quality is not easy for investors. Therefore, a number of investors may obtain
profitability from receiving information quicker and more accurately than others. It can
be called the asymmetry of information.
According to many authors as Akerlof (1970), asymmetric information could take
place as stakeholders are intentional in order to suppress information, the buyers do not
have accurate and opportune information leads to evaluating lower than real price of
stock. As a result, the sellers do not have motivation enough to maintain valuable
Phan Hoa Thao Nguyen | Page 5


goods and just provide normal goods for the market. Hence, asymmetric information
can even lead to market existing weak quality products, high-grade goods are
eliminated out of market and the result is adverse selection and moral hazard. The
impact of asymmetric information influencing on investors and businesses also effects
on SEM. Loosing trust with SEM prohibits development of the SEM in particular and
economy in general.

From research of Akerlof (1970), it can be said that an information asymmetry
problem is existed in relationship between shareholders and managers. According to
this theory, the managers have a chance in order to approach information better than
shareholders; by contrary, the shareholders could not evaluate what activities are
happening in business and make a decision accurately. Thus, disclosure of information
mitigates cost of capital as decreasing asymmetric information (Botosan, 1997).
Therefore, voluntary disclosure is indicated as a suitable tool for corporation to
decrease information asymmetry problem. If the managers do not disseminate business
and investment information, this may cause a large leakage of cost of capital which
lead to damage for shareholders. Healy and Palepu (2001) indicated the solutions for
limiting agency cost in their research as optimal contract and regulations. According to
this paper, optimal contract between managers and shareholders is to disclose more
information, and so decrease agency cost. The second solution, regulations are also put
as a sanction that asks managers to disclose thoroughly their business information.
Another key thing to remember, there is always existence of board of management to
supervise and control manager’s activities in listed firms on SEM. Finally, external
supervisors such as financial analysts participate in information providing process to
detect the opposite activities to shareholders’ benefit. The existing of agency problem
become incentives contributing to motivate information disclosure clearer on SEM.

Phan Hoa Thao Nguyen | Page 6


It is argued that many determinants have influences on voluntary disclosure of
information in firms which corporate governance is one of the important factors.
Concretely, Li et al (2008) examine the relationship intellectual disclosure and
corporate governance based on data from 100 UK companies. The corporate
governance is measured by board composition, ownership structure, audit committee
and duality of CEO and chairman. The regression result indicates that corporate
governance has significant influences on disclosure, except for duality responsibility.

Similarly, Tsamenyi (2007) also find the significant association between ownership
structure and disclosure when examining impact of corporate governance on disclosure
in Ghana. By using extracted data from European biotechnology firms, Cerbioni and
Parbonetti (2008) contribute to support the agency theory as examining relationship of
corporate governance and voluntary intellectual disclosure. Based on empirical
evidences, the corporate governance is examined in different aspects as independent
directors, board structure, and CEO duality support for decision making process of
regulators, analysts and investors. Moreover, Allegrini and Greco (2011) investigate
the interaction between corporate governance and disclosure with the existence of
agency theory. The finding of research is suitable for existing of outside and inside
directors in corporations in specific time contributing to minimize the cost of agency
conflicts and asymmetric information between inside and outside shareholders.
In previous researches, corporate governance is investigated from many different
authors, and measured by many different attributes in order to find out association of
corporate governance and voluntary disclosure. Klapper and Love (2002) expressed
that their empirical evidence is correlated to firm performance and market valuation.
Board of directors is responsible for supervising and controlling firm’s activities. It is
argued that board structure contains size and independence which influence on board’s
performance (Harford et al, 2012). This literature also states that the big board
Phan Hoa Thao Nguyen | Page 7


encounters difficulty to making decisions. Similarly, Yermack (1996) find the same
result, the small board is easy to decide firm’s problems. Byrd and Hickman (1992)
find that firms with high proportion of independent directors at minimum level of 50%
refer extraordinary profit to other companies. Xie et al (2003) investigate the
relationship of earnings management and corporate governance. The financial
performance of a firm is impacted by board structure and composition
In addition, Gul and Leung (2004) also examines about the combination between
voluntary earnings disclosure and corporate governance factors in French companies.

The result said that there is a negative association between board leader structure and
voluntary earnings disclosure (see also Samaha et al, (2012); Lakhal (2005); Arcay
and Vázquez (2005); Raffournier (1995); and Barako (2006). By contrast, Haniffa and
Cooke (2002) could not find the significant association of duality of director and
chairman on information disclosure. Kelton and Yang (2008) investigated the impact
of corporate governance on disclosure of information on Internet by using data of 305
companies in NASDAQ National market collected in 2003. They found the positive
relationship between board independence and voluntary disclosure of financial
information (see also Cheng and Courtenay, 2006). The evidence is that the higher
percentage of the independence members is, the higher the ability joins into the internet
financial reporting. In addition, the world economy is developing strongly and
globalization becomes popular, companies have tendency to be multinational firms,
then they need more capital to expand dimensions and size. That said they have
tendency to disseminate more information to attract capital from investors. Cerbioni
and Parbonetti (2008) indicate the influences of corporate governance on voluntary
disclosure containing positive association of independent directors and negative
relationship of CEO duality to voluntary intellectual disclosure. On the other hand,
Allegrini and Greco (2011) find the positive association between board size and
Phan Hoa Thao Nguyen | Page 8


voluntary disclosure while a negative relationship is found for CEO and voluntary
disclosure. However, the research finds insignificant association between independent
directors and voluntary disclosure.
Among different studies about disclosure, Eng and Mak (2003) investigate the
relationship between ownership and board composition on voluntary disclosure. The
mentioned voluntary disclosure contains non financial and financial information, and
unforced information. The final result finds the positive impact of managerial
ownership and state ownership on voluntary disclosure. It may be suitable for
developing countries where there is an existence of state and family ownership (see

also Said et al, 2009). Ho and Wong (2001) also find the relationship between
corporate governance characteristics as independent directors, audit committee, CEOs,
family members and voluntary disclosure. The research contributes evidence for
market participants to make investment decisions as finding out the significant
association of audit committee and family members to voluntary disclosure. Moreover,
Kelton and Yang (2008) find the impact of blockholder on voluntary disclosure. The
result indicates that a low percentage of blockholder may disclose more annual report
information of corporations. In addition, the research of Ta (2012) examined about the
gap between Financial Analysts’ requirements and Financial Managers’ viewpoints
with Vietnam listed companies in responding information disclosure. The final result
found significant gaps between Financial Analysts’ requirements, Financial Managers’
viewpoints and responsible ability of listed companies in Vietnam. This means that
many items have not been disclosed sufficiently to requirements of Financial Analysts
and Financial Managers’ viewpoint. On the other hand, this research also found that the
general corporate information is the highest item disclosed, and second is forwardlooking information. Another research of Vu et al, (2011) investigates influences of
independent directors and ownership structure on voluntary disclosure of listed
Phan Hoa Thao Nguyen | Page 9


companies in Vietnam. The result shows a negative and positive relationship between
state-owned ownership and managerial ownership and extent of voluntary disclosure.
The state ownership and voluntary disclosure relationship are examined by many
previous researches. According to Mak and Li (2001), state ownership is defined as
owning 20% or more than of state in that company. Luo et al (2006) said that the
economic theories forecast state-owned companies disclose less information to avoid
contradiction with national benefit. Managers of state-owned corporations are
obstructed disclosing information; by contrast, in sensitive industries they are requested
in order to disclose more for starting reforms. However, the result revealed a weak
relationship of return and earnings and voluntary disclosure in state-owned companies.
Bassam et al (2015) find that the positive and significant relationship between state

ownership and voluntary disclosure. Based on data of companies on Saudi Arabia
SEM, Bassam et al (2015) examine the relationship between the extent of disclosure
and corporate governance practices, and between corporate governance disclosure and
ownership and board. The result found a positive and significant influence of
disclosure and ownership in companies with large ownership of government. Similarly,
examining relationship between corporate governance characteristics and voluntary
disclosure is also the research objective of Said et al (2009). It is measured by many
different factors; however, state ownership is one of the variables having important
significance beside to ownership concentration and audit committee. It also found the
positive and significant sign of government ownership and extent of disclosure. On the
other hand, Huafang and Jianguo (2007) investigate the relationship between voluntary
disclosure and ownership structure which is measured by blockholder, managerial
ownership, state ownership and board composition in accordance with data of China
listed firms. However, this research found insignificant relationship of voluntary

Phan Hoa Thao Nguyen | Page 10


disclosure and state ownership (see also Laswad, 2005). Therefore I believe that, in
Vietnam:
H1: There is a positive relationship between corporate governance and voluntary
disclosure in state-owned companies
Anderson and Reeb (2003) said that members of family usually own a big number
of shares, control activities of the companies, and dispossess minority shareholders’
benefit. On the other hand, a board with majority of outside directors may be effective
more than family ownership and mitigate agency cost in relationship of representatives
and delegators. Evidence from research of Haniffa and Cooke (2002) is about the
relationship of governance and the extent of voluntary disclosure of information stated
that the result of regression model shows significant association between non-executive
director variable and family member variable on board and voluntary disclosure.

The other researches indicate that corporate governance usually does not take
important role in family corporations, thus, family members are easier to dispossess
benefit for themselves. Family companies have less voluntary disclosure of information
in order to prevent approaching information of companies’ stakeholders (see also Khan
et al, 2013). Family firms are the reason for increasing the agency cost in a different
aspect. The evidence is that Bartholomeusz and Tanewski (2006) reveal that family
members use their dominating authority to occupy profit of outside shareholders. On
the other hand, family members take advantage of block holding in order to operate
corporations’ activities and avoid risky projects that influencing to other minority
shareholders’ benefit.
The most important objective in any company is the decreasing asymmetric
information which is the main origin of agency problem. The structure of company
ownership may influence on the nature of agency problem between managers and
shareholders. As the ownership of company is distracted contributing to raise the
Phan Hoa Thao Nguyen | Page 11


agency problem, by contrast, the ownership of company is concentrated mitigating the
agency cost (Maury (2006). It is argued that the family company performance is higher
than non-family controlled companies because of lower agency cost (see also
Villalonga & Amit, 2006). Concerning to the family control and agency cost, another
research of Ahmed and Siddiqui (2013) about the corporate governance and social
disclosure stated that a board occupied by many family members usually tends to make
important decisions before discussing in board meetings, thus board meetings have just
been a symbol.
Chau and Gray (2002) stated that the companies which are not relevant to family
ownership may disclose less information than companies that existing family
ownership. These family owned companies have most of important positions such as
chairman and CEOs are occupied by family members. Beside impact of increasing
agency cost, Bartholomeusz and Tanewski (2006) argue about reasons that family

ownership may decrease agency cost. First, since benefit and cost of the companies are
obtained from same managers of corporations, thus they would try to raise benefit and
mitigate cost in order to preserve their property that may decrease firm’s agency cost.
Second, they have experts to supervise corporation’s activities. Third, the objective is
the maximization their property, hence the family firms abide absolutely principles in
order to ensure their firm face. Fourth, the family members are connected together
closely on basis of faithfulness, effective information communication which decrease
the agency cost.
Tinaikar (2009) examines relationship between voluntary compensation disclosure
and ownership. The mentioned ownerships are the managerial ownership and family
ownership. The collecting of data is based on sources of 210 dual class firms in the
fiscal year 1999. The result found that the disclosure ownership increase would make
voluntary disclosure increasing. Khan et al (2013) indicate that the selection of
Phan Hoa Thao Nguyen | Page 12


independent directors and CEO duality is a member influenced from family members
may impact positively to voluntary information disclosure. Chau and Gray (2002) find
the negative relationship of family ownership and voluntary disclosure when there is
less information disclosed in family controlled companies. Similarly, Ho and Wong
(2001) also find the negative influence of family ownership on voluntary disclosure.
Therefore, I also believe that in Vietnam:
H2: There is a negative association of corporate governance and voluntary
disclosure in family-owned companies
Many previous papers researched about the determinants of voluntary disclosure
ago. Besides, Internet takes an important role in exchanging information effectively
between countries together. Moreover, internet also is a tool for companies in order to
disseminate information to shareholders. Laswad et al (2005) investigated the factors
that can explain firm’s financial information disclosure on internet. The data used in
this paper contains 229 firms on New Zealand SEM and multivariate logistic

regression analysis are employed to test the hypotheses. The result shows that
ownership spread has negative effect on voluntary disclosure. It implies a big number
of shares owned by top shareholders would have less information disclosed to market.
However, Eng and Mak (2003) could not find the significant relationship between
block shareholder and voluntary disclosure.
H3: There is a negative association of corporate governance and voluntary
disclosure in block shareholder companies
There is an existence of agency problems and information asymmetry in almost of
listed companies which raise cost of agency and cost of capital. In order to mitigate
these problems, the top objective of many firms is the information disclosure from
financial information to governance information for investors and shareholders to
attract investment capital for firms’ projects. Hence, corporate governance may be
Phan Hoa Thao Nguyen | Page 13


considered the top important in influencing on disclosure policy. It is argued that the
popular organization form of companies in East Asian region is family ownership
encountering agency problems different to Western companies (Claessens and Fan,
2002). Unlike to USA or other developed countries, corporate governance forms in
these developing countries, especially in Vietnam, may be contained the combination
of family-controlled and state-controlled ownership. Almost empirical evidences have
proceeded from USA, some come from Germany and Italy (Shleifer and Vishny,
1997). Unfortunately, there has been little study about ownership and voluntary
disclosure in developing countries. The main contribution of this study is the research
data set from a developing countries as Vietnam existing of major corporate
governance forms as family ownership and government ownership. In the extent of this
research, the ownership types as government ownership, family ownership and block
shareholder ownership are examined in order to recognize their impacts on disclosure
decisions of Vietnamese companies where there is an existence of a big number of
SOEs and family-owned companies.

Phan Hoa Thao Nguyen | Page 14


Figure: 2.1: The conceptual framework
Information
asymmetry
theory

Agency theory
VOLUNTARY
DISCLOSURE

Cost of capital

Agency cost

Ownership:
- State-Owned
- Family-Owned
- Blockholder

Corporate
Governance

Board
independence

Board leader
structure

1

2

1. BOARD LEADER STRUCTURE

Board size

3

VOLUNTARY DISCLOSURE
2

1

Stateowned

Familyowned

3

Blockholder

2. BOARD INDEPENDENCE

VOLUNTARY DISCLOSURE
4

5

Stateowned

Familyowned

6
Blockholder

3. BOARD SIZE

VOLUNTARY DISCLOSURE
7

StatePhan Hoa Thao Nguyen |owned
Page 15

8

Familyowned

9

Blockholder


CHAPTER 3
SAMPLE DATA AND RESEARCH METHODOLOGY

The initial data is manually collected at firm level from HOSE containing 346
publicly traded firms; However, after excluding financial sector such as banks, the

insurance companies, stock firms, investment funds, and unavailable data firms, the
final sample are of 237 firms. In addition, the research indicators such as information
disclosure and family ownership which are hand collected from firms annual reports in
year of 2010, 2013 and 2015 only by assuming that these variables should remain
unchanged in one year. The annual reports of firms in sample are mainly obtained from
companies’ websites and other sources such as cafef.vn, cophieu68.vn, and
vietstock.vn.
This paper examines impacts of corporate governance on voluntary disclosure
which has been intensively investigated by a number of studies in literature. However,
unlike other research, this paper focuses more on state-ownership, family-ownership
and block shareholders on firm’s voluntary disclosure, which are salient characteristics
of corporations in East Asia transition countries such as China and hence this topic has
not been examined thoroughly, especially in small transition country like Vietnam.
This section illustrates the main research model of paper. The model contains
dependent and independent variables which are constructed on basic of theoretical and
empirical evidences investigated in chapter two, especially in accordance with research
of Allegrini and Greco (2011), Laksmana (2008) about relationship of corporate
governance and voluntary disclosure and Bassam et al (2015) about ownership
structure and voluntary disclosure. Firstly, the dependent variable is the voluntary
disclosure of information in annual reports of listed firms on HOSE. Secondly, the

Phan Hoa Thao Nguyen | Page 16