Study the quality of accounting information in annual reports of listed companies on the vietnam stock exchange

The quality of the accounting information disclosed in the annual reports of listed companies directly affects the judgments and decisions of users of accounting information, such as sha

SUMMARY OF DOCTOR THESIS IN ECONOMICS

HA NOI, 2024

Full name of scientific advisors: Prof, PhD Nguyen Trong Co

Assoc Prof, PhD Nghiêm Thi Tha

Reviewer 1:

Reviewer 2:

Reviewer 3:

The thesis will be defended before the Academy-level Thesis Examination Council meeting at .at hour day month year

The thesis can be found at:

- Library, Academy of Finance;

- National Library

INTRODUCTION

1 The necessity of the research topic

Accounting information (AI) is the output of the accounting information system, utilized by users of accounting information (such as investors, banks, suppliers, government agencies, etc.) to assess the risks and future prospects of a company AI is provided to external stakeholders through accounting reports The annual report (AR) and the financial statements (FS) are sources of useful information for stakeholders (shareholders, investors, banks, government agencies, etc.) While FS provides only financial information, AR offers a more comprehensive overview, including both financial and non-financial information The AR presents an overall picture of the company's business activities over the past year; it highlights the risks, including objective risks (policy risks, market risks) and subjective risks inherent in the company's activities and management capabilities; and it outlines the risk mitigation measures proposed by the company

The quality of the accounting information disclosed in the annual reports of listed companies directly affects the judgments and decisions of users of accounting information, such as shareholders, investors, securities companies, corporate managers, and government agencies Therefore, the quality of accounting information in annual reports is a primary concern for investors, banks, government agencies, and researchers

Therefore, it is essential to assess the current quality of accounting information and to study and understand the factors affecting the quality of accounting information in the annual reports of listed companies on the Vietnam Stock Exchange Based on this, solutions and recommendations can be proposed to improve the quality of accounting information in the annual reports of listed companies, thereby increasing the confidence of information users, especially investors This is the reason I chose the topic: “Research on the Quality of Accounting Information in the Annual Reports of Listed Companies on the Vietnam Stock Exchange” for my thesis

2 Literature Review

2.1 Studies related to measuring the quality of accounting information 2.2 Studies on factors affecting the quality of accounting information

2.3 Identifying Research Gaps

After reviewing the existing studies on measuring the quality of AI and the factors affecting the quality of AI in companies, the author identifies the following research gaps:

(1) Existing research has primarily focused on the quality of information

in FS, with no studies addressing the quality of AI in ARs of listed companies on the Vietnam Stock Exchange This represents a gap that the author aims to address

in this thesis

(2) In 2020, the Ministry of Finance issued Circular 96/2020/TT-BTC (effective from January 1, 2021), which replaced Circular 155/2015/TT-BTC on information disclosure in the stock market Circular 96/2020/TT-BTC established higher requirements for information disclosure to improve the quality of information published on the stock market Additionally, the author has found that in Vietnam, research on the impact of factors on the quality of information in FS has mostly been conducted at the provincial/city level or within industry groups, with very few studies focusing on the Vietnam Stock Exchange and using data from before the issuance of Circular 96/2020/TT-BTC This represents a gap that the author aims to address in this thesis

(3) In a company, the Chief Accountant oversees all accounting keeping, consolidates costs and revenues to prepare FS, manages assets, risk, and investments, and coordinates with other departments on cost issues The Chief Accountant frequently participates in discussions and consultations with the Board

record-of Directors (Hiebl, Quinn, & Martínez Franco, 2015) Additionally, in listed companies, the Chief Accountant plays a key role in communicating financial strategies externally, in other words, interacting with the capital market (Mian, 2001) Therefore, the Chief Accountant is a significant factor affecting the quality

of AI in a company However, based on a review of previous research, the author notes that studies have only examined the impact of the competence of accounting staff or their qualifications on information quality, without addressing the competence of the Chief Accountant Thus, the author includes the factor

"Competence of the Chief Accountant" in this thesis as a new element influencing the quality of AI in ARs of listed companies on the Vietnam Stock Exchange

- Propose solutions to improve the quality of AI in ARs of listed companies

on the Vietnam Stock Exchange

5 Research Subjects and Scope

5.1 Research Subjects:

- The quality of AI in ARs of listed companies on the Vietnam Stock Exchange

- The factors affecting the quality of AI in ARs of listed companies on the Vietnam Stock Exchange

5.2 Scope of Research:

- Geographical Scope: Listed companies (excluding those in the financial, securities, and insurance sectors) on the two subsidiaries of the Vietnam Stock Exchange, namely the Ho Chi Minh City Stock Exchange and the Hanoi Stock Exchange

- Content Scope: AI and the factors affecting the quality of AI in ARs of listed companies on the two subsidiaries of the Vietnam Stock Exchange

- Temporal Scope: Research data will be collected from ARs of listed companies for the year 2022 on the two subsidiaries of the Vietnam Stock Exchange

6 Research Methodology

6.1 Research Process

Figure 1 Research process (page 5)

The author uses a combination of qualitative and quantitative research methods

6.2 Qualitative research methods

Based on previous studies, theoretical basis of related issues and background theories, the author proposes a research model of factors affecting the quality of AI

on ARs of companies listed on the Vietnam Stock Exchange and the measurement scale for variables in the model

Next, the author conducted interviews with experts who have specialized knowledge in finance and accounting, understand the quality of financial statements, regularly use the annual reports of listed companies to perform their work and have

10 years or more of working experience, including lecturers in accounting and finance, financial analysts and bank employees The author called the experts to

explain the reason for the interview and asked for an interview schedule with each expert From the results of the interviews with the experts, the author formed an official research model and an official scale of the variables in the model and carried out the next steps

Figure 1 Research process

(Source: Author's own design)

6.3 Quantitative research methods

After establishing the official research model and the formal measurement scales for the variables, the author will use a survey questionnaire to collect primary

Literature Review Identifying Research Gaps

Qualitative research

- Systematize the theoretical basis of issues related to the research topic: ARs,

AI on ARs, quality of AI on ARs and basic theories applied in the research;

- Interview experts to determine formal research model and scales

Quantitative research (Survey and descriptive statistical analysis to assess the current status of the quality of AI in ARs; Test hypotheses about the impact of factors on the quality

of AI in ARs)

Analyze and discuss results Proposed Solutions Determine the objectives, objects and scope of the research

data and will use the annual reports of listed companies on the Vietnam Stock Exchange to gather secondary data

With the data collected from the survey results, the author will use SPSS 22.0

to process the data, performing reliability analysis with Cronbach's Alpha to test the reliability of the measurement scales for the factors and conducting Exploratory Factor Analysis (EFA) Next, the author will use Excel and SPSS 22.0 for descriptive statistics and to analyze the current state of the quality of accounting information in the annual reports of listed companies on the Vietnam Stock Exchange The AMOS software will be employed to test the Structural Equation Modeling (SEM) to examine the impact of various factors on the quality of accounting information in the annual reports of listed companies on the Vietnam Stock Exchange

7 New Contributions of the thesis

- The thesis has systematized and clarified the theoretical foundations regarding ARs, AI, and the quality of AI in ARs of listed companies Additionally, the thesis has synthesized previous studies to examine the factors affecting the quality of AI and some foundational theories applied in researching the factors influencing the quality of AI in ARs of listed companies

- The thesis has identified the measurement scale for the quality of AI in Ars

of listed companies on the Vietnam Stock Exchange according to the attributes of accounting information Additionally, based on the survey results and assessments from external users of AI, the thesis has clarified the current state of the quality of

AI in ARs of listed companies on the Vietnam Stock Exchange

- The thesis has evaluated the impact of factors on the quality of AI in ARs of listed companies on the Vietnam Stock Exchange From these results, it will assist users of AI in general and individual investors in particular in the stock market in using accounting information to make decisions

- The thesis has proposed solutions and conditions for implementing these solutions to improve the quality of AI in ARs of listed companies on the Vietnam

Stock Exchange These solutions are aligned with the objectives and development orientation of the Vietnamese stock market towards 2030, aiming to create a stable, safe, healthy, efficient, sustainable, and integrated market

8 Structure of the thesis

The thesis comprises the following three main chapters:

Chapter 1: Theory on the Quality of Accounting Information in the Annual Reports of Listed Companies

Chapter 2: Current State of the Quality of Accounting Information in the Annual Reports of Listed Companies on the Vietnam Stock Exchange

Chapter 3: Solutions to Improve the Quality of Accounting Information in the Annual Reports of Listed Companies on the Vietnam Stock Exchange

In addition to these main chapters, the thesis includes an introduction, conclusion, bibliography, and appendices

CHAPTER 1: THEORY ON THE QUALITY OF ACCOUNTING

INFORMATION IN THE ANNUAL REPORTS OF LISTED COMPANIES 1.1 Annual reports and accounting information in the annual reports of

listed companies

1.1.1 Annual reports

1.1.1.1 Concept of annual reports

The annual report (AR) can be considered an official communication document of a company, prepared to meet mandatory reporting requirements in various countries The AR provides stakeholders with financial information and other data about the company as required by law Additionally, the AR is the primary source for the company to disclose non-financial information (NFI) The more transparent the disclosure of NFI in the AR, the stronger the confidence of investors

in the company (Gulin, Hladika, & Mićin, 2018)

1.1.1.2 Role of annual reports

The annual report (AR) is a crucial information channel for company

management and stakeholders (shareholders, investors, creditors, government agencies, etc.) in making business decisions, investment choices, and policy formulation

1.1.1.3 Content of annual reports

According to the International Financial Reporting Standards (IFRS), an annual report typically includes the following contents (IASB, 2010):

- Letter from the Chairman to Shareholders;

- Performance Review;

- Board of Directors' Report: Business Evaluation;

- Board of Directors' Report: Corporate Governance;

- Financial Statements, which include: Accounting Policies, Income Statement, Balance Sheet, Cash Flow Statement, Statement of Changes in Equity, Notes to the Financial Statements, Auditor’s Report

According to Circular 96/2020/TT-BTC (Ministry of Finance, 2020), the annual report of a company includes the following main contents:

- Firstly, general information about the company

- Secondly, information on the company’s operations during the year

- Thirdly, reports and evaluations from the Management Board (Management Board reports and evaluates all aspects of the company)

- Fourthly, the Board of Directors' assessment of the company’s operations (for joint-stock companies)

- Fifthly, information related to corporate governance

- Sixthly, audited financial statements and the auditor’s opinion

1.1.2 Accounting information in the annual reports of listed companies

1.1.2.1 Concept of accounting information

According to many authors, accounting information is financial information presented in the company's financial statements and is very useful for decision-making by management and stakeholders However, this view is considered traditional With the current trend of globalization, the advent of new technologies

and business activities, as well as the transition to a knowledge-based economy, the relevance of information solely from financial statements has diminished To assess company value, financial analysts and investors also use information beyond financial statements, namely non-financial information (NFI) (Orens & Lybaert, 2010) Therefore, accounting information increasingly encompasses non-financial information (Monteiro, Porto, de Almeida Leite, Ribeiro, & Alves, 2021; Orens & Lybaert, 2010), reflecting the modern perspective of accounting

1.1.2.2 Role of accounting information

1.1.2.3 Classification of accounting information in the annual reports of listed companies

❖ Classification by time:

Information disclosed in annual reports can be classified as historical information and forward-looking information (Hussainey, 2004)

❖ Classification by information nature:

According to the nature of the information, the content in annual reports includes financial information (FI) and non-financial information (NFI)

1.2 Quality of accounting information in the annual reports of listed companies

1.2.1 Concept of quality of accounting information

There are various definitions of the quality of accounting information, but generally, authors focus on the usefulness of the information Accordingly, the quality of accounting information is defined as information that meets the criteria of relevance, accuracy, timeliness, and completeness

1.2.2 Characteristics of the quality of accounting information

1.2.2.1 According to researchers' perspectives:

Most researchers agree that the characteristics of high-quality accounting information are relevance and faithful representation

1.2.2.2 According to IASB and FASB:

According to the International Accounting Standards Board (IASB) and the

Financial Accounting Standards Board (FASB), the characteristics of useful information are divided into fundamental and enhancing characteristics Fundamental characteristics include relevance and faithful representation Enhancing characteristics include comparability, verifiability, timeliness, and understandability (IASB, 2010)

1.2.2.3 According to the 2018 Conceptual Framework (IASB 2018):

The fundamental qualitative characteristics of useful financial information are relevance and faithful representation The enhancing qualitative characteristics are comparability, verifiability, timeliness, and understandability

1.2.2.4 According to Vietnamese Accounting Standards (VAS):

Companies must ensure that financial statements provide information that meets the following requirements (Ministry of Finance, 2003): relevance and reliability

1.3 Methods for measuring the quality of accounting information

1.3.1 Measuring accounting information quality using the accrual model 1.3.2 Measuring accounting information quality using the value relevance model

1.3.3 Measuring accounting information quality through specific financial statement elements

1.3.4 Measuring accounting information quality through the operationalization of qualitative characteristics

According to this method, studies have operationalized the development of questions addressing the qualitative characteristics of accounting information to evaluate its quality from various dimensions This approach aims to determine the usefulness of financial statement information in decision-making processes

1.4 Relevant theories and factors influencing the quality of accounting information in the annual reports of listed companies

1.4.1 Some theories used in research on factors influencing the quality of accounting information

1.4.1.1 Prospect theory

1.4.1.2 Signaling theory

1.4.1.3 Resource-based theory

1.4.1.4 Agency theory

1.4.2 Factors influencing the quality of accounting information in the annual

reports of listed companies

1.4.2.1 Company size

1.4.2.2 Length of listing

1.4.2.3 Chief accountant’s competence

1.4.2.4 Audit firm size

Conclusion of Chapter 1

In Chapter 1, the author has systematically presented the theories related to the AR, AI in the AR, and the characteristics of the quality of AI in the AR Additionally, this chapter summarizes the methods for measuring the quality of AI, foundational theories, and the factors influencing the quality of AI within the research model Overall, the research findings on the factors affecting the quality of

AI reveal some differences The comprehensive content in Chapter 1 provides a foundational basis for the author to carry out the subsequent research steps of the thesis

CHAPTER 2: CURRENT STATE OF THE QUALITY OF ACCOUNTING INFORMATION IN THE ANNUAL REPORTS OF LISTED COMPANIES

ON THE VIETNAM STOCK EXCHANGE 2.1 General introduction to the Vietnam Stock Exchange and listed companies on the Vietnam Stock Exchange

2.1.1 Overview of the Vietnamese Stock Market

2.1.2 Overview of the Vietnam Stock Exchange

2.1.3 Overview of Listed Companies on the Vietnam Stock Exchange