Transparency and Disclosure Practice in Accounting Reports of Stateowned Enterprises: A Case Study of Vietnamese Irrigation and Drainage Management Companies

- This reduces the explanatory power of the disclosure data.
- Most of the VIDMCs are state-owned enterprises and the state holds 100% of equity.
- Broader accountability to the public and their elected representatives is expected from all public sector entities as a function of the democratic process.
- Public accountability is based on the premise that the public has the “right to know” (PSAB’s 2011).
- the Parliament to evaluate the performance of the state as an owner.
- The present study has attempted to investigate the level of disclosure in VIDMCs’.
- The second part represents the empirical study based on the analytical investigation of the extent of disclosure practice within the accounting reports of VIDMCs.
- In the end of the paper it can be found the concluding remarks and directions for further research.
- The areas covered underpin both the theoretical and empirical aspects of the study..
- Thus, disclosure has been identified as one of the most fundamental elements contributing to transparency.
- The first approach is the use of objective vehicles which are based on the direct study of the original information source as content analysis and the use of a disclosure index.
- One way of measuring information disclosed is to count the number of conference calls, which study the frequency with which certain information is disclosed and analysis of the impact positive and negative news has on the level of disclosure.
- Brown, Hillegeist, and Lo used proxy disclosure of the number of conference calls made by each company to measure the level of voluntary disclosure, while Verrecchia analyses the number of documents released by the companies in the three previous months before and after a public share offer..
- The second approach use questionnaire and interview means to send to financial analysts, investors and other users information about the disclosure practices of the entities..
- All the vehicles are used directly without relying on the analysis of the original source of the information studies.
- Some of the typical examples of this approach are including scores elaborated by the CIFAR (The Center for International Financial Analysis and Research) and by Standard &.
- The CIFAR index has been used in different studies as a measure of the level of disclosure such as La Porta et al.
- Standard and Poor's Institute have performed comprehensive research works for evaluating information provision quality and transparency of the companies with cooperation of academics in different countries.
- A disclosure index is a measure representing the level of information provided by the company, which can be considered voluntary and/or mandatory, calculated on the basis of specific elements observed based on one or more specific sources of information (Davide Scaltrito, 2015)..
- Scope index is a self-constructed index and it is the ratio of the number of forward-looking information items disclosed by the company to the total number of forward-looking information items that may be disclosed.
- The list of items chosen is based on the guidance offered by professional bodies and the classification scheme suggested by Robb, Single and Zarzeski (2001), Francisco Bravo Urquaza, (2009).
- Beretta, et al (2004) believes that the quality of disclosure depends on the quantity of information disclosed and the richness of its content.
- SOEs should report material financial and non-financial information on the enterprise in line with high quality internationally recognised standards of corporate disclosure, and including areas of significant concern for the state as an owner and the general public..
- The governance, ownership and voting structure of the enterprise, including the content of any corporate governance code or policy and implementation processes;.
- Any financial assistance, including guarantees, received from the state and commitments made on behalf of the SOE, including contractual commitments and liabilities arising from public-private partnerships;.
- The development strategy of the enterprise;.
- The annual production and business plan and development investment of the enterprise;.
- An annual report on the results of implementation of the annual production and business plan and the latest three (3) years up to the reporting year;.
- Annual reports on the reorganization and renewal of enterprises;.
- Report on the current state of corporate governance and organization;.
- Six (06) months financial statement and annual financial report of the enterprise;.
- Report on the salary and bonus regime of the enterprise..
- Moreover, the enterprise must report to the representative office of the state owner and publicly disclose abnormal information upon the occurrence of one of the events specified in Clause 1, Article 109 of the Law on Enterprises dated 26 November 2014:.
- Part of or all of the business operation is suspended.
- Replacement of managers, including members of the Board of members, the company's President, Director/General Director or Deputy Director/Deputy General Director, Chief Controller, Controllers, Chief accountant, Head of Finance and Accounting Department;.
- There is a decision on disciplinary action, prosecution, a court’s sentence of decision against one of the enterprise’s manager;.
- This part focuses to review empirical aspects of the study which about identifying the extent of information disclosure..
- The data are collected from Annual reports of 126 public companies listed on the countries' stock exchanges, supplemented with other relevant information about financial disclosure practices in each country.
- Results show the relative degree of conformity with IASs for each of the countries included in this study..
- Mohammed Hossain (2008) conducted an empirical investigation of the extent of both mandatory and voluntary disclosure by listed banking companies in India.
- Vo Thi Thuy Trang and Nguyen Cong Phuong (2015) examine levels of the disclosure in the annual reports of the listed companies listed on HOSE in 2013 by applying disclosure indexes to measure the amount disclosure information in the annual report of these companies.
- The results indicate that the levels of the voluntary disclosure in the annual report by the listed companies is low at 23,9%..
- Our sample consists of all companies listed from statistics of the Directorate of Water Resources.
- Information for the extraction and analysis of information content for the purposes of the study is from different channels such as companies’ website, business.gov.vn and other portal..
- The annual production and business plan and development investment of the enterprise (2).
- An annual report on the results of implementation of the annual production and business plan and the latest three (3) years up to the reporting year (3).
- Annual reports on the reorganization and renewal of enterprises (5).
- Report on the current state of corporate governance and organization (6).
- Report on the salary and bonus regime of the enterprise (8) and Abnormal information (9)..
- disclosure Disclosure Note 1 Has the company publicly disclosed.
- the development strategy of the enterprise?.
- 2 Has the company publicly disclosed the enterprise's five-year.
- 3 Has the company publicly disclosed the annual production and business plan and development investment of the enterprise?.
- 4 Has the company publicly disclosed An annual report on the results of implementation of the annual production and business plan and the latest three years up to the reporting year?.
- 5 Has the company publicly disclosed a report on results of performance of public-utility tasks and other social responsibilities (if any)?.
- 6 Has the company publicly disclosed Annual reports on the reorganization and renewal of enterprises?.
- 7 Has the company publicly disclosed the Report on the current state of corporate governance and.
- 8 Has the company publicly disclosed which Board member qualifications, selection process, including board diversity policies, roles on other.
- 9 Has the company publicly disclosed annual financial report of the.
- 10 Has the company publicly disclosed Six months financial statement?.
- 12 Has the company publicly disclosed any material foreseeable risk factors and measures taken to manage such risks?.
- 13 Has the company publicly disclosed any financial assistance, including guarantees, received from the state and commitments made on behalf of the SOE, including contractual commitments and liabilities arising from public-private partnerships?.
- 14 Has the company publicly disclosed any material transactions with the state and other related entities?.
- 15 Has the company publicly disclosed Report on the salary and bonus regime of the enterprise?.
- 16 Has the company publicly disclosed the remuneration of board members and key executives?.
- 17 Has the company publicly disclosed Abnormal information?.
- The level of company disclosure is measured by the ratio between the score of the company and its maximum possible score for not to penalize it for non-disclosing items when they are not relevant to its activities..
- Table 2 contains the descriptive statistics for the values of the indices..
- According to the statistics of the Directorate of Water Resources, Vietnam has all 88 VIDMCs, one of which is Nam Song Thuong Irrigation Company established in 2018, so the company is not in the survey.
- The results of the survey show that there are 72 companies which publish information mainly on the business.gov.vn, several companies simultaneously disclose on their website, the remaining companies do not disclose annual reports, so the median differ from the mean..
- However, the level of disclosure is not high and there is a large dispersion.
- The development strategy of the enterprise.
- investment of the enterprise..
- An annual report on the results of implementation of the.
- Annual reports on the reorganization and renewal of enterprises.
- The Report on the current state of corporate governance and.
- Annual financial report of the enterprise.
- the state and commitments made on behalf of the SOE, including contractual commitments and liabilities arising from public-private partnerships..
- Report on the salary and bonus regime of the enterprise.
- The results show that the level of disclosure of items increased over the years, so VIDMCs increasingly comply with the regulations of the state.
- of companies disclosed Annual financial report, Report on the salary and bonus of the enterprise and the remuneration of board members, which are followed by the annual production and business plan and development investment of the enterprise, Annual reports on the reorganization and renewal of enterprises and financial assistance.
- Whereas, the development strategy of the enterprise, Material foreseeable risk factors and measures taken to manage such risks and abnormal information have been least disclosed by the sample companies.
- The main purpose of the article has been to analyse the level of VIDMCs’ compliance on the disclosure of accounting reports in accordance with state regulations.
- The most important information that VIDMCs have least provided in the annual reports consists of: The development strategy of the enterprise, material foreseeable risk factors and measures taken to manage such risks and abnormal information.
- Also, non-financial information (such as the salary and bonus regime of the enterprise, Financial assistance, including guarantees, received from the state and commitments made on behalf of the SOE, material transactions with the state and other related entities) is only disclosed in general, the content of the report is not quantified..
- Firstly, the legal regulations of the state are not strong enough for VIDMCs disclosure adequately and qualitatively.
- Secondly, managers as well as accountants in VIDMCs lack aware of the importance of publishing accounting reports.
- Bases on the research result, we have some suggestions should be made to policy regulators and managers:.
- The sanctions stated in the law must be applied on the violating companies that are not committed to disclosure.
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