VGU RESEARCH REPOSITORY
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Title: | Corporate governance in Vietnam | Authors: | Pham Ngoc Tan | Keywords: | Corporate governance;IFRS;Vietnam | Issue Date: | 2017 | Publisher: | Vietnamese-German University | Abstract: | First and foremost, this paper will introduce some basic theories of Corporate Governance (CG) like agency problem, corporate social responsibility (CSR), role of financial reporting, functions of accounting and auditing standards. Agency problem can be considered as the major cause of the fall of every CG system, so for the better CG structure, agency problem or agency cost must be minimized and wiped out. Next is the societal and cultural values. Every CG framework is based on ideology, and CG essentially involves balancing the interests of a company’s many stakeholders and community. Particularly, societal and cultural values in every country are different and this is usually one of the most influential reasons that affects the decision on future updating or changing CG system of any nation. There are various institutional, economic, political, social and cultural barriers to the effective implementation of Organization for Economic Co-operation and Development (OECD)’s corporate governance principles in developing countries.1 One more thing to mention, a high quality of financial report is the key to having positive investment of investors and the auditor is the only party who can verify the credit of the financial report based on accounting standards and regulations. Therefore, a CG system always needs changing and modernizing its accounting standard to satisfy these expectations. But to which extent are these changes and updates of CG and accounting standards beneficial? Secondly, Rising Dragon or The New Tiger is one of the most probable names you may hear about Vietnam’s economy in recent years. After many difficult years since the financial crisis in 2008 followed with real estate bubble in Vietnam (VN), this country is rising rapidly and becoming one of the most attractive markets for investment. Does it mean VN is a good and safe place for investment? The answer for this question can be a comment from Barclays Stockbrokers: It could become the next China – but Vietnam is an investment only for the brave.2 Hence, VN is changing and so is with the growth of the economic, VN CG has been developing year by year and Vietnamese Accounting Standard (VAS) was formed. The very first step was Law of Enterprises in 2005 to the listing rules of Ho Chi Minh Stock Exchanges (HOSE) and Hanoi Stock Exchanges (HNX). Moreover, these improvements of CG in VN will provide a single and trusted standard of financial report and accounting standard to investor and auditor. Thus, does VN receive any benefit from the establishment of VAS and changes in CG? As people may know, VN is an emerging country which means VN does have obstacles and limits for foreign investors such as complicated law or inexplicit VAS. Following the rise of capital in the stock market, there is not only one but many Vietnamese companies that have been taking advantage of VAS for their own interests and also harming the investor benefits. To make sure these scandals won’t happen again, investors require not only more transparency but also more understandable standards that can protect their benefits. But would the situation have been different in case changes in accounting and CG were made before, not only in VN but around the globe? The purpose of the establishment of International Financial Reporting Standards (IFRS) is to bring a consistent, common, single and transparency financial reporting standard to every nations. Firstly, IFRS is not a new standard and many countries in the world have accepted it. Secondly, IFRS helps companies and markets to operate more efficiently by having a single, trusted global standard across both developed and emerging economies.3 Many countries in the world has converged their system to IFRS and there are factors which can affect this decision. Do these factors influence the decision of VN? Vietnamese experts with traditional view from old perspective just want to adapt IFRS and learn from the experience of other countries to update VAS while the young and current generation VN experts ask for innovation of VAS by fully adopting IFRS. What should VN government do? To fully adopt or just adapt IFRS and update Vietnamese Financial Reporting Standards (VFRS)? And no matter what the decision is, will it strengthen the economic prosperity? Last but not least, the final chapter will be respecting the future plan of Vietnam in later years. VN government already had its own procedure for the two situations of adopting or adapting IFRS and the roadmap expected of upcoming CG revolution will also be discussed. |
URI(1): | http://epub.vgu.edu.vn/handle/dlibvgu/658 | Rights: | Attribution-NonCommercial 4.0 International |
Appears in Collections: | Finance & Accounting (FA) |
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