Perceptions of Corporate Executives in the Adoption of Integrated Reporting in Vietnam

- Perceptions of Corporate Executives in the Adoption of Integrated Reporting in Vietnam.
- Integrated Reporting (IR) has been widely adopted by companies around the world.
- Questionnaires were sent to 300 companies listed on the stock market of Vietnam, however, only 532 answers were received in which 369 responses of 135 listed companies were valid..
- The results showed that none of the surveyed companies adopting IR, some companies are considering adopting IR due to its benefits.
- The study proved that the perception of managers is a decisive factor in the adoption and implementation of IR.
- These are usually static documents that do not encourage readers to analyse further the situation of the enterprises.
- The collapse of the housing bubble had led to bankruptcies of many companies, consequently, stakeholders.
- Most information in the FSs did not provide information on the development strategies, business performance and business risks, as well as non-financial information (Busco và cộng sự, 2013).
- In order to meet the information needs, companies have published both FSs and the sustainable development reports (SDRs).
- In addition, many countries in the world, especially developing countries, are seriously affected by climate changes, resource scarcity, poverty, inequality, and alarming situation of CO2 emissions.
- Significant changes in policies and development strategies of the government and enterprises should separate the economic growth from greenhouse gas emissions to create prerequisites for developing a sustainable economy that meets the needs of both present and future generations.
- It requires enterprises to pay attention to non-financial information to enable stakeholders to have a comprehensive view of business operations, to assess their ability to create and maintain corporate value in the future.
- The International Integrated Reporting Council (IIRC, 2013) provided that reports of enterprises have changed dramatically over time with a growing trend of accountability to stakeholders including accountability to the environment and society in general.
- Consequently, the appearance of IR in 2010 is inevitable to meet the current information needs of stakeholders..
- Vietnam is one of the countries which do not require companies to prepare FSs as requirements of IIRC.
- With the rapid change of the market economy, the Vietnamese Accounting Standards have many limitations.
- Particularly, the quality of accounting information on the FSs and the annual reports of enterprises reveals certain weaknesses and transparency of the FSs is relatively low which affect interests of investors, causing difficulties for the management of the state agencies, reducing confidence of the public.
- Although IR is a relatively new phenomenon, there is an increasing global interest in this reporting system and the emphasis is placed on the adoption and implementation of IR as a new management tool of enterprises.
- In fact, there has been much research examining IR as an emerging issue (De Villiers et al., 2014), especially, some studies focused on the results and benefits of IR (Stubbs and Higgins, 2014.
- These studies provide an insight into thinking, policy and practice of IR..
- past experiences, needs and its complex perception affecting the application and dissemination of IR.
- In addition, Nuwan Gunarathne and Samanthi Senaratne (2017) also applied the DOI theory to investigate the perception of senior executives about the adoption of IR in Sri Lanka.
- The research results proved that Sri Lanka is in the diffusion phase of IR in which more and more companies are adopting IR.
- Early adopters remain formalistic due to active diffusion of IR.
- The study also provided that adopting IR is the development of the SDR.
- These studies are considered a lesson of learning experience for developing countries adopting IR as a management technology and countries at various stages of diffusion of IR..
- One advantage of IR is that non-financial information must be integrated not only in reporting but also in all decision-making processes of an organization.
- Adams (2015) argued that the adoption of IR improves the decision-making process of organizations as well as risk management processes.
- Making the best decisions based on the results of IR will encourage managers to acknowledge and appriciate non-financial factors in their decisions (Hampton, 2012).
- Eccles and Armbrester (2011) assumed that the adoption of IR to build long-term sustainable strategies helps the organization to create value over the long term, at the same time, providing information to stakeholders which promotes the stock price of organizations.
- In a study conducted in South Africa, Steyn (2014) found that the respondents fully supported the adoption of IR of South Africa as it drew attention from the stakeholders..
- IR helps investors understand the sustainable development issues of the company in addition to the financial information to make the right investment decisions..
- Overall, the previous studies have provided critical arguments for the current reporting system and provided guidelines for the adoption of IR instead of the FSs and sustainable development reports.
- Especially, the adoption and implementation of IR have showed certain benefits and superiorities in many organizations around the world.
- Any long- term commitment to create value for the investors and positive impact on other stakeholders is encouraged, therefore, a comprehensive report which is beneficial for both inside and outside of the organizations is necessary and is the future of the current reporting system and Vietnam must face this inevitable trend..
- The study applied diffusion of innovations theory of Rogers (2003) to assess factors impacting the adoption of IR.
- Rogers expanded studies since 1950s on how innovations diffuse in the society and introduced the concept of S-shaped curve which is a curve describing the adoption of innovations over time.
- Particularly, there are three main groups of factors: (1) Factors relating to leadership: leaders have a substantial impact on the acceptance of innovations in organizations through strong advocacy, capability of directing, guiding and organizing the implementation.
- (3) External factors: In addition to the internal characteristics of organizations, the external factors also have a significant impact on the acceptance of innovations of organizations.
- Specifically, an innovative and competitive environment can promote the adoption of innovations.
- Qualitative research was based on the review of previous studies and background theories, combining with in-depth interviews with some experts, senior executives, finance directors, chief accountants or people directly participating in the preparation of FSs, SDRs.
- The results helped the authors develop research model, research hypotheses and factors that affect the diffusion of adopting IR in companies listed on the stock market of Vietnam.
- Quantitative research used data collected from the survey to test the research model of the factors influencing the diffusion of applying IR in enterprises listed on the stock market of Vietnam.
- The 5-point Likert scale was used to assess the benefits of adopting IR and the challenges of applying IR.
- In order to analyze data, statistical method was used with the support of the software SPSS 22..
- Questionnaires were distributed to 798 respondents of 300 companies listed on the stock market of Vietnam, in which 2/3 amount of questionnaires were answered directly, the remaining questionnaires were sent by email to respondents through relationships of the authors.
- Among 369 respondents, general directors/deputy general directors accounted for 14.9%.
- executive directors/deputy executive directors accounted for 27.64%.
- finance directors/deputy finance directors/managers accounted for 31.16%, the remaining was accountants accounting for 26.3%.
- These people represented companies in the fields such as manufacturing, construction, real estate, industry, finance, banking, commerce, telecommunications, services.
- Regarding the experience of respondents, under 5 years accounted for 4.06%.
- from 5 years to 10 years accounted for 27.91%.
- from 11 years to 20 years accounted for 38.22%.
- over 20 years accounted for 29.81%..
- Respondents were asked about perceptions towards IR in listed companies in Vietnam.
- Their responses are displayed in the following table:.
- When being asked about understanding of IR, the respondents admitted that their understanding of IR is not much.
- Regarding the level of understanding, 28% respondents stated that they have no knowledge of IR, 62% respondents have certain understanding of IR, only 3% have in-depth knowledge of IR, 7% have good knowledge of IR.
- These findings are consistent with the results of qualitative research that interviewed experts and senior executives..
- Understanding of IR.
- Benefits of adopting IR.
- The authors pointed out that the benefits of adopting IR include transparency (LC1);.
- The results showed that the variable LC1 "transparency".
- Challenges of adopting IR.
- The authors pointed out that the challenges faced by enterprises when adopting IR include: High initial application costs (TT1).
- no regulations on preparing IR in Vietnam (TT6).
- no incentive policies encouraging the adoption of IR (TT7);.
- The results showed that variable TT1 “High initial application costs” had the highest mean which is 3.95.
- The plan of adopting IR.
- The results showed that none of the surveyed companies adopting IR, some of which are considering adopting IR due to its benefits.
- considering adopting IR as their own financial reporting mechanism.
- The findings seem to be consistent with the qualitative results of the previous authors..
- Considering the adoption of IR 50 13,55.
- The results showed that the majority of respondents learned about IR through attending training courses which accounted for 48%.
- The duration of training courses of IR.
- To assess the preparation of knowledge of IR, respondents were asked about the duration of a training course of IR.
- The results showed that 2-day courses accounted for 23.8%.
- 3-day courses accounted for 42.8%.
- 1-week courses accounted for 18.2% and courses which are longer than a week accounted for 15.2%..
- The duration of training courses of IR The number of days Frequency Percentage.
- It seems that IR is relatively to the market and enterprises in Vietnam, so there has been only a few organizations concerning about IR, especially, Bao Viet is one of the sucessful enterprises in implementing IR.
- Although IR is quite new in Vietnam and the level of awareness and understanding is relatively low, the study showed that 13.55% of enterprises are considering adopting IR.
- In this survey, the respondents wished that associations and the State Securities Commission would organize courses and seminars to raise awareness and understanding of IR for businesses.
- Accordingly, adopting IR is a new direction and an option allowing enterprises to meet the.
- requirements of the economic development and the international economic integration.
- From the above analysis, it can be seen that a suitable direction for domestic enterprises is to adopt IR in the process of international integration..
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