Corporate governance disclosure and annual reports quality: An investigation in Vietnam context

Figures & data

Table 1. Top authors that published papers related to corporate governance disclosure and quality of annual reports from 2004 to 2022

Author	Documents	Citations	Total link v strength
Dams f.	8	16	8
Ymoff h.	6	13	6
Albitar k.	5	29	4
Arshad r.	7	7	4
Hmsainey k.	16	396	4
Taylor 9.	5	120	3
Tower 9.	7	171	3
Agyei-mens.a1h b..lc.	6	108	0
Ghazali n.a.m.	5	237	0
Hashim h.a.	6	28	0
Soobaroyen t.	5	137	0

Source: Authors assessment based on Scopus databases

Table 2. Top authors have the highest citations and research

Authors	Title	Year	Source title	Cited by
Jizi M.I., Salama A., Dixon R., Stratling R.	Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector	2014	Journal of Business Ethics	391
Khan A., Muttakin M.B., Siddiqui J.	Corporate Governance and Corporate Social Responsibility Disclosures: Evidence from an Emerging Economy	2013	Journal of Business Ethics	556
Said R., Zainuddin Y., Haron H.	The relationship between corporate social responsibility disclosure and corporate governance characteristics in Malaysian public listed companies	2009	Social Responsibility Journal	330
Li J., Pike R., Haniffa R.	Intellectual capital disclosure and corporate governance structure in UK firms	2008	Accounting and Business Research	309
Barako D.G., Hancock P., Izan H.Y.	Factors influencing voluntary corporate disclosure by Kenyan companies	2006	Corporate Governance: An International Review	453
Haniffa R.M., Cooke T.E.	The impact of culture and governance on corporate social reporting	2005	Journal of Accounting and Public Policy	938

Source: Authors assessment based on Scopus databases

Chart 1. The link strength between corporate governance disclosure and annual reports.

Source: Authors assessment based on Scopus databases by VOSviewer

Table 3. Statistic of occurrences and total link strength of keywords

Keyword	Occurrences	Total link strength
agency theory	21	62
annual reports	42	124
audit committee	14	34
banks	6	15
compliance	7	12
content analysis	30	73
corporate disclosure	9	14
corporate governance disclosure	271	521
corporate social responsibility	56	125
corporate social responsibility disclosure	6	14
corporate strategy	7	30
csr disclosure	8	14
developing world	5	27
disclosure	68	153
disclosure index	6	10
disclosures	13	25
economic and social effects	12	63
economics	5	26
emerging markets	7	15

Source: Authors assessment based on Scopus databases

Table 4. Summary and analysis of literature review on corporate governance

Authors	Analysis
Jizi et al. (2014)	The study focused on banking sector with a large sample of US commercial banks. The research based on an agency-theoretical view point and illustrated that board of directors promote transparency and affect corporate governance disclosure.
Hussain et al (2003)	The study revealed that there was no evidence to prove that corporate governance has an impact on firm performance. Additionally, the response rate of questionnaire was poor.
Khan et al. (2013)	The study based on the legitimacy theory. The paper measured level of corporate governance disclosure by board composition, multiple directorship and type of shareholders while annual reports quality is measured by index score. The result showed that corporate governance disclosure positively associated with annual reports quality. However the measurement of corporate governance should be more detail and should eliminate the subjective matters.
Othman and Zegal (2010)	An interesting study of corporate governance impact on firm performance in the context of Kuwait. The research period was for the year 2008. The limitation of the study is the fixed period and limited sample data.

Source: Authors assessment

Table 5. Top 25 companies’ annual reports were awarded in term of size in 2021

No	Top 5 large size companies	No	Top 5 medium size companies	No	Top 5 small size companies
1	Phat Dat Corporation	1	Pan Group	1	Everpia JSC
2	HDBank	2	Saigon-Hanoi Securities JSC	2	CNG Vietnam JSC
3	PetroVietnam Drilling and Well Service Corporation	3	DHG Pharmaceutical JSC	3	Southern Gas Trading JSC
4	Vietnam Dairy Products JSC	4	Century Synthetic Fiber Corporation	4	Searefico Refrigeration Industry Joint Stock Company
5	NovaLand Group	5	TNG Investment and Trading JSC	5	Viet Tien Son Real Estate Holding Company
6	Asia Commercial Joint Stock Bank	6	Bao Viet Securities
7	Vietnam Joint Stock Commercial Bank For Industry and Trade (VietinBank)	7	Binh Minh Plastic JSC
8	SSI Securities	8	VICOSTONE JSC
9	Saigon—Hanoi Commercial Joint Stock Bank	9	PetroVietnam Camau Fertilizer SJC
10	Vingroup	10	An Phat Xanh Plastic JSC

Source: VLCA (2021)

Table 6. Top 15 companies’ CGR were awarded in term of size in 2021

No	Top 5 large size companies	No	Top 5 medium size companies	No	Top 5 small size companies
1	Vietnam Dairy Products JSC	1	DHG Pharmaceutical JSC	1	CIC39 JSC
2	FPT Corporation	2	Gia Lai Power JSC	2	Rong Viet Securities JSC
3	Thanh Thanh Cong—Bien Hoa JSC	3	Imexpharm Corporation	3	Khanh Hoa Power JSC
4	Bao Viet Holdings	4	Traphaco JSC	4	Tan Cang Logistics & Stevedoring
5	Ho Chi Minh City Securities Corporation	5	Pan Group	5	Vietnam National Petroleum Group

Source: VLCA (2021)

Table 7. LM and F tests of homogeneity

	CGD	CGD-RIGHTS	CGD-ROLE	CGD-DISCLOSURE	CGD-BOD
	m = 1	m = 1	m = 1	m = 1	m = 1
LM test	0.0027	0.0012	0.0020	0.0015	0.0017
F test	0.0030	0.0029	0.0031	0.0027	0.0030

Source: Authors assessment

Table 8. Reliability statistic

Cronbach’s Alpha	Number of items
0.730	102
0.852	81

Source: Authors assessment

Table 9. Descriptive statistics for dependent, independent and control variables (n = 356)

Variables	Mean	Std. Dev.	Min	Max
ARQ	73.8	8.90	54.0	91.0
CGD	52.6	4.21	35.0	79.0
CGD-RIGHTS	20.5	2.11	8.0	28.0
CGD-ROLE	15.6	1.26	9.00	25.0
CGD-DISCLOSURE	12.7	0.81	6.00	19.0
CGD-BOD	7.03	0.56	3.00	9.00
SIZE	20.7	9.01	17.38	41.20
LEVERAGE	0.52	0.06	0.12	0.79
S-GROWTH	13.95	7.27	3.49	67.8

Source: Authors assessment

Table 10. Pearson correlation matrix

	ARQ	CGD-RIGHTS	CGD-ROLE	CGD-DISCLOSURE	CGD-BOD	SIZE	LEVERAGE	S-GROWTH
ARQ	1.000	0.000	0.007	0.003	0.000	−0.103	0.002	0.209
CGD-RIGHTS		1.000	−0.328	0.410	−0.119	0.336	0.186	0.027
CGD-ROLE			1.000	−0.087	0.071	0.148	0.010	−0.04
CGD-DISCLOSURE				1.000	0.005	−0.143	−0.053	−0.001
CGD-BOD					1.000	0.244	0.225	0.009
SIZE						1.000	0.091	0.935
LEVERAGE							1.000	0.547
S-GROWTH								1.000

All p—values are two—tailed

Source: Authors assessment

Table 11. The effect of CGD’s dimensions and ARQ

	Annual Report Quality (ARQ)
CGD	0.004*** (0.001)
CGD-RIGHTS	0.041 ** (0.013)
CGD-RIGHTS x g (.)	0.034 *** (0.001)
CGD-ROLE	0.052* (0.003)
CGD-ROLE x g (.)	0.015 ** (0.007)
CGD-DISCLOSURE	0.056* (0.001)
CGD-DISCLOSURE x g (.)	0.0061* (0.002)
CGD-BOD	0.080* (0.000)
CGD-BOD x g (.)	0.073* (0.001)
SIZE	0.160* (0.034)
LEVERAGE	0.001** (0.000)
SALES—GROWTH	−0.309* (0.172)
LagARQ	0.003*** (0.001)
Transition parameters
CGD (c1,1)	50.82*** (0.000)
CGD (γ)	43.71 (0.506)
CGD-RIGHTS (c1,1)	25.74** (0.002)
CGD-RIGHTS (γ)	30.22 (0.604)
CGD-ROLE (c1,1)	18.36* (0.023)
CGD-ROLE (γ)	21.78 (0.819)
CGD-DISCLOSURE (c1,1)	15.07* (0.005)
CGD-DISCLOSURE (γ)	19.24 (0.429)
CGD-BOD (c1,1)	10.16** (0.003)
CGD-BOD (γ)	9.75 (0.108)

Notes: CGD-RIGHTS, CGD-ROLE, CGD-DISCLOSURE and CGD-BOD represent the various components of the composite index (CGD). C_1,1 and. γ represent the estimated location parameter and estimated slope parameter in equation (2)(2) $\mathit{g}\left(q_{it};\gamma ;c\right)=[1+Exp(-\gamma {\prod }_{\mathit{j}=1}^{\mathit{m}}({\mathit{q}}_{\mathit{i}\mathit{t}}-{\mathit{c}}_{\mathit{j}})){]}^{-1}$(2) ; the location parameters can be interpreted directly as the level of CGD. *** p < 0.01, ** p < 0.05, * p < 0.1

Source: Authors assessment

Table 12. Wald test result in fixed effect regression model

Chi-square	Prob. Chi—square
14.85	0.013

The Table 12 illustrates that The Chi—square = 14.85 with p—value = 0.013 > 0.05, we reject H1 and accept H0 illustrating that data is homoscedastic and OLS is more suitable than FEM. (See more in appendix).

Table

Item	CG Principles	Details	Guiding References
1	A	Does the company fully pay dividends within 6 months after being approved by shareholders at annual general meetings (AGM)?	Law of Enterprise (LOE), Article 131, Clause 3
2	A	Does the company hold the annual AGM of shareholders within 4 months from the end of the financial year, but not beyond 6 months from the end of the financial year if applying for extension?	Decree 71, Article 8 LOE, Article 136
3	A	Does the company website disclose all documents of the general meeting of shareholders (standard documents), including: (1) Notice of invitation with meeting agenda, (2) Form of appointment of an authorized representative to attend the meeting, (3) Draft resolutions for each issue in the agenda, (4) Report on activities of board of director, report on activities of supervisory board/ audit committee	LOE, Article 139, Clause 4
4	A	In the notice of invitation to attend general meeting, does the company give the instruction for shareholders to place items on the agenda of AGM before the start of meeting?	OECD (2015) Principles G20, Vietnamese Corporate Governance Code 9.2.2
5	A	Does the AGM documents provide the profiles of new candidates for board of directors and supervisory board (at least: age, academic/ professional qualification, experience, date of first appointment and directorships in other listed companies, independence) at least 10 days before the start of AGM?	Decree 71, Article 11
6	A	Did company practise and disclose specifically in the minutes of the general meeting of shareholders the application of modern information technology so that shareholders are able to attend and express their opinion at the general meeting in the best manner, including guidance for shareholders to vote online at meetings, or to vote electronically or via other electronic methods?	LOE, Article 140, Clause 2
7	A	Does the company disclose the voting results including approving, dissenting, and abstaining votes for all resolutions/ agenda items for the most recent AGM?	LOE, Article 142, Clause 2
8	A	Does the minute of the most recent AGM record that the shareholders were given the opportunity to ask questions and the questions raised by shareholders and answers given recorded?	OECD (2015), Principles II (C)
9	A	Does the minute of the most recent AGM disclose the list of board members, supervisory board members and CEO who attended?	OECD (2015), Principles II (C)
10	A	Does the company disclose its practices to encourage shareholders to engage with the company (excluding complaints) beyond AGM (e.g., investor conferences, meeting programs …)?	OECD (2015)
11	A	Does the company establish Investor Relations department (IR) and disclose the contact details of the officer/ office responsible for investor relations? Officer/ office responsible for investor relations?	OECD (2015)
12	A	Does the company disclose the notice of invitation and documents of general meeting in English?	OECD (2015)
13	B	Is the list of audit firms seeking appointment/reappointment clearly identified in general meeting?	OECD (2015) Vietnamese Corporate Governance Code 7.6.1
14	C	Does the company disclose assessment report pertaining to environmental and social responsibilities?	Circular 155
15	C	Does the company disclose a policy and practices thatdescribe company’s efforts to ensure the implementation of environmental protection standards in supplier/ contractor selection procedures?	OECD (2015)
16	C	Does the company disclose a policy and practices thatdescribe company’s efforts to ensure the implementation of environmental protection standards in the process of trading and consuming products and services?	OECD (2015) Principle II (C); Corporate Governance Code 10.1
17	C	Does the company disclose a policy and practices that describe company’s efforts to address customers’ welfare?	G20/OECD (2015) Principle IV (A
18	C	Does the company explicitly disclose the policies and practices on health, safety and welfare for its employees?	G20/OECD Principle (2015) IV (C)
19	C	Does the company explicitly disclose the policies and practices on training and development programmes for its employees; and clearly disclose the training results (e.g., average hours spent on training)?	G20/OECD Principle (2015) IV (C)
20	C	Does the company have a reward/ compensation policy that accounts for the performance of the company beyond short-term financial measures (financial and/or nonfinancial performance)	G20/OECD Principle (2015) IV (C)
21	C	Does the company have and disclose a whistle blowing policy that enables all stakeholders to raise concerns on alleged illegal/ unethical behaviour?	G20/OECD Principle (2015) IV (C)
22	C	Does the company have the code of ethics or code of conduct that requires all directors, senior management and employees to comply with the code(s) and explicitly disclose how breaches are handled?	G20/OECD Principle (2015) IV (C)
23	C	Does the company provide contact details via the company’s website or annual reports which stakeholders (e.g., customers, suppliers, general public etc) can use to voice their concerns and/ or complaints for possible violation of their rights?	G20/OECD Principle (2015) IV (B)
24	D	Does the company disclose the direct shareholdings of each member of the board of directors, supervisory board and board of management/ CEO?	Circular 155
25	D	Does the company disclose the direct shareholdings of major/ substantial shareholders?	G20/OECD Principle (2015) IV (B)
26	D	Does the annual report disclose the company’s shareholding structure (4 major classifications: by ownership proportion; institutional and individual shareholders; domestic and foreign shareholders; State and other shareholders)?	Circular 155
27	D	Does the annual report disclose the independence of directors?	Circular 155
28	D	Does the annual report contain a statement confirming the company’s full compliance with the code of corporate governance; and where there is non—compliance, identify and explain reasons for each such issue?	Circular 155
29	D	Does the annual report disclose remuneration, other benefits and expenses paid by the company to each directors and members of the supervisory board (if any)?	Circular 155
30	D	Is the compensation of the CEO and other senior managers (at least Chief Accountant) recorded in a seperate item with details of salary and allowance for each person?	Decree 71, Article 31
31	D	Does the company release its annual reports timely as required?	Circular 155
32	D	Does the company release its bi-annual and annual corporate governance reports on time as required?	Decree 71, Article 30 Circular 155
33	D	Does the company website disclose up-to-date information (downloadable): Company charter and corporate governance policy?	Circular 155
34	D	Are biographical details (at least age, academic/ professional qualifications, date of first appointment, relevant experiences, and any other directorships of listed companies) of all directors sufficiently disclosed?	G20/OECD (2015) Principle II (C) Circular 155
35	E	Does the board of directors have at least 1/3 of the total members of the board being independent directors?	Decree 71, Article 13
36	E	Does the company have any director that simultaneously holds board seats of more than 05 other companies?	Decree 71, Article 12
37	E	Does the company apply a good practice of having no director being a former CEO of the company in the past 2 years?	G20/OECD (2015)
38	E	The composition of the board of directors must ensure diversity of knowledge and experience in law, finance and business fields that the company is operating in	Decree 71, Article 13
39	E	Does the company have a policy to ensure gender diversity in the board of directors?	Decree 71, Article 13
40	E	Does the composition of the current board of directors ensure gender diversity?	Decree 71, Article 13
41	E	Does the company disclose the criteria used in selecting new directors beyond statutory base aligned with the company’s sustainable development strategy?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 2.1
42	E	Does the company disclose the process of searching, selecting, nominating and selecting candidates to the board of directors?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 2.1
43	E	Do the directors attend training courses on corporate governance?	Circular 155
44	E	Does the board of directors appoint at least one person in charge of corporate governance/ corporate secretary?	Circular 95 Article 32
45	E	Did the corporate secretary/ person in charge of corporate governance attend training courses in legal, accountancy or other useful program for the good practice in their roles and responsibilities during the year?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 2.3.4
46	E	Did the board of directors meet at least once a quarter, and each director attend at least ¾ of all board meetings being held during the year?	Circular 95 Article 30
47	E	Did the non-executive directors of the company meet separately at least once during the year without any executives present?	G20/ OECD (2015) Principle II (C)
48	E	Does report on activities of board of directors contain the board’s leadership role in the process of developing, monitoring/ reviewing the company’s strategic implementation?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 1.1.2
49	E	Are assessment reports on activities of board of directors in the year made by independent directors?	Decree 71, Article 16
50	E	Does report on activities of board of directors contain summary of the board meetings and resolutions made by the board?	Decree 71, Article 9
51	E	Does report on activities of board of directors contain future plans?	Decree 71, Article 9
52	E	Does the board of directors conduct an annual performance assessment of the CEO/ Managing director and board of management?	Circular 155
53	E	Are the Chairman of the Board and the CEO separate persons?	G20/ OECD (2015) Principle VI Corporate Governance Code 3.5.1
54	E	Is a chairman an independent director?	G20/ OECD (2015) Principle VI Corporate Governance Code 3.5.1
55	E	Does the company have following committees: Nomination committee and Remuneration Committee?	G20/ OECD (2015) Principle VI (E) Corporate Governance Code 4.3
56	E	Are the chairman of two committees under the BOD (Nomination Committee, Remuneration Committee) independent directors?	G20/ OECD (2015) Principle VI (E)
57	E	Does head of the supervisory board/ chairman of the audit committee have accounting, auditing, financial expertise or experience?	Decree 71, Article 20
58	E	Is the head of the supervisory board/ chairman of the audit committee an independent director?	G20/ OECD (2015) Principle VI Corporate Governance Code 4.1.1
59	E	Does the company have a separate internal audit function?	G20/ OECD (2015) Principle VI Corporate Governance Code 7.2
60	E	Is there any evidence that the supervisory board or audit committee evaluates the collaboration between the supervisory board or audit committee with the board of directors and the board of management?	Decree 71, Article 10
61	E	Is there evidence that the supervisory board or audit committee conducts an assessment of an external auditing firm and financial statements?	Decree 71, Article 10
62	E	Did the supervisory board of audit committee meet at least 2 times during the year and is the meeting attendance of each member disclosed?	Decree 71, Article 23
63	E	Did the board of directors assess and disclose the risk control response, and ensure compliance with the law during the year? Does the assessment statement correspond to the relevant evidence?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 1.1
64	E	Does the company disclose the key risks to which the company is materially exposed to (i.e. financial, accounting, internal control, operational including IT, environmental, social, economic)?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 1.1.5
65	E	Does the company make publicly available by the next working day the result of the votes taken during the most recent general meeting of shareholders for all resolutions in English?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 9.4.3
66	E	Does the company have policies for minority shareholders/ a group of minority shareholders (owing less than 5% of the total voting shares) to be provided with the opportunity to propose nominees for the board of directors?	Corporate Governance Code 2.1.6
67	E	Does the company prepare and disclose an internationally recognized Sustainable Development Report (i.e. Integrated Reporting)?	G20/ OECD (2015) Principle IV (A)
68	E	Is there evidence that the service contracts that the external auditors offers to the company still maintain the independence of the external auditor (through evaluation of the supervisory board/ audit committee, through statements, or through relative fees of audit services compared to non audit services)?	G20/ OECD (2015) Principle V (A) Corporate Governance Code 7.6.3
69	E	Does the board of directors conduct a self-assessment on what the company has been, and is preparing to apply the Vietnam Corporate Governance Code of Best Practices (CG Code), and when the company is not ready to apply, does the board explain?	Corporate Governance Code
70	A	Is the list of audit firms seeking appointment/ reappointment clearly identified in general meeting?	LOE, Article 139, Clause 1
71	A	Is there a lack of evidence that the general meeting of shareholders has approved remuneration, expenses and benefits paid by the company to the board of directors and the supervisory board (if any)?	LOE, Article 158, Clause 2 LOE, Article 167
72	A	Is there a lack of evidence that the company makes publicly available by the next working day the result of the votes taken during the most recent general meeting of shareholders for all resolutions?	Circular 155
73	B	Was there any conviction of insider trading involving directors, management and employees from the beginning of the financial year to date?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 1.2.8
74	B	Was there any case of non compliance with the laws, rules and regulations pertaining to material related party transactions from the beginning of the financial year to date?	G20/ OECD (2015) Principle II (C) Corporate Governance Code 9.5
75	D	Was the company reminded and/ or did it face any sanctions by the Stock Exchange/ State Securities Commissions (SCC) for violations related to information disclosure or other obligations of listed companies?	Decree 71, Article 28
76	D	Did the company reissue its audited financial statements in the past year for reasons other than changes in accounting policies?	G20/ OECD (2015) Principle II (C)
77	D	Was there any violation of insiders pertaining to information disclosure on trading in the company’s shares?	Circular 155
78	D	Was there a lack of evidence that the company has disclosed attendance details of each director in all board meeting held during the year?	Decree 71
79	E	Is any of the members of the supervisory board/ audit committee working in the accounting/ financial departments of the company?	Decree 71/ Article 20
80	E	Is the company’s President/ General Director a female member
81	E	The number of female members in the Board of Directors

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