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 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENT ACKNOWLEDGEMENTS .iv TABLE OF CONTENT .vi LIST OF TABLE .ix LIST OF FIGURES.7 CHAPTER 1: LITERATURE REVIEW .1 Definition Investor Relations .2 Function of Investor Relations .3 The correlation between IR (Investor relations) and PR (Public relations) .2 Definition of disclosure .2 Roles of disclosure on stock market .15 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.3 Principle of disclosure .1 Accuracy, fidelity and sufficiency .2 Disclosing information promptly and regularly .3 Regulation Fair Disclosure (Reg FD) .4 An overview of disclosure on Vietnam’s stock market .2 The causes of violations .5 The case of disclosure activity at China Construction Bank .1 Overview of China Construction Bank .2 Empirical case of disclosure activities at China Construction Bank .29 CHAPTER 2: AN OVERVIEWOF DISCLOSURE ON BIDV .1 Overview of BIDV .2 The process of formation and development .2 Position of BIDV in the financial market .1 The leading bank in project and enterprise financing .2 Retail banking - Multichannel and modern distribution network .3 Expansion of international investment and being a reliable counterpartner of international financial institutions .4 The leading bank in transparency and quality management .5 The first bank in implementing the policies of the Party and the Government, and the social security tasks .3 Disclosure of information at BIDV .44 vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.4 Assessment on disclosure activities at BIDV .1 Description of the Research process .3 Depth interview result .60 CHAPTER3: RECOMMENDATIONS AND ACTION PLANS TO IMPROVE DISCLOSURE ACTIVITY AT BIDV .1 Recommendations to improve disclosure activity at BIDV .1 Developing Investor Relations Department .2 Setting up Information Policy of BIDV .3 Standardizing the internal disclosure process .4 Building database and processing false information.5 Utilizing the role of spokesperson .6 Building website for investors (IR portal) .79 viii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLE Table 1.1: Comparison between IR and PR .1: BIDV process of formation and development .2: Percentage of respondent survey .3: Assessment on content of information disclosed.4: The level of interests in financial reports.5: The level of interests in non- financial information .6: Assessment on BIDV website (Investor Relation portal) .7: Comparing the website for investors .8: The action plan timetable .74 ix LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure2.1: The organization chart of BIDV .2: BIDV Key Strengths .3: Financial capacity of BIDV and other banks .4 : The information flow and reporting channels outside .5: The research process .6: Assessement on time of disclosure at BIDV .7 : Assessment on content of information disclosed .8: The level of interests in financial reports .9: Quality of BIDV’s financial reports .10 : The level of interests in non- financial information .11: The level of interests in non-financial information .12: Means to get BIDV’s information .13: Assessment on BIDV website (Investor Relation portal) .59 x LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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. Research methodology Both qualitative and quantitative approaches are used to answer the research questions.
1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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. values, attitudes, perceptions. Qualitative research involves analysis of data such as words (e., from interviews), pictures (e., video), or objects (e. 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., 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. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Quantitative approach is one in which the researcher uses positivistic methodology to develop knowledge (e. 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., 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 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 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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.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. 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
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. 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. 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.
Follow-up 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 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. 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Thesis structure INTRODUCTION 1.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 Chapter 2: AN OVERVIEW OF DISCLOSURE AT BIDV 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 3.2 Action plan CONCLUSION 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: LITERATURE REVIEW 1.1 Definition Investor Relations 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.