Exploring the role of good leadership and corporate governance practices in improving institutional investment to listed companies in vietnam stock market

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI YEN VY EXPLORING THE ROLE OF GOOD LEADERSHIP AND CORPORATE GOVERNANCE PRACTICES IN IMPROVING INSTITUTIONAL INVESTMENT TO LISTED COMPANIES IN VIETNAM STOCK MARKET Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS Supervisors: Dr Tạ Ngọc Cầu Hà Nguyên, MBA Hanoi – 2012 TABLE OF CONTENTS ACKNOWLEDGMENT ABSTRACT TÓM TẮT TABLE OF CONTENTS LIST OF FIGURES LIST OF ACRONYMS INTRODUCTION CHAPTER 1: LITERATURE REVIEW 1.1 An overview of institutional investors 1.1.1 The impact of having institutional investors involved in a company’s ownership 1.1.2 What influences the investment decision of institutional investors (Determinants of institutional ownership) 1.2 An overview of leadership and corporate governance 1.2.1 Leadership 1.2.2 Corporate Governance 1.3 Why good leadership and corporate governance practices can help companies in general and vietnamese listed companies in particular to attract institutional investment 1.3.1 They become “an increasingly important factor for investment decisions" 1.3.2 Mitigate agency problems 1.3.3 Create greater value for companies 1.3.4 Institutional investors would pay a good premium for well led and governed companies Chapter summary: CHAPTER 2: ANALYSIS AND ASSESSMENT ON THE APPLICATION OF LEADERSHIP-CORPORATE GOVERNANCE PRACTICES IN VIETNAM LISTED COMPANIES 2.1 Business environment in Vietnam 2.1.1 Vietnam Economic Outlook 2.1.2 Vietnam Stock Market 2.2 Leadership and corporate governance in Vietnamese listed companies 2.2.1 Organization type influences the leadership and corporate governance style 2.2.2 Vietnamese companies are late developers in the area of leadership development 2.2.3 A large majority of Vietnamese companies are either state-owned or family-owned 2.2.4 Board of Directors, committees and CEOs issues 2.2.5 Ambiguous disclosure practice and weak transparency 2.2.6 Weak regulation to protect minority shareholders 2.2.7 Weak risk management 2.2.8 Remuneration/Compensation 2.2.9 Communication (Investor Relation) 2.3 Three cases of most attracted Stocks – ABC, FPT and VNM 2.3.1 The case of ACB 2.3.2 The case of FPT 2.3.3 The case of VNM Chapter summary CHAPTER 3: RECOMMENDATION 3.1 Opportunities and threats to the improvement of institutional investors into Vietnamese listed companies 3.1.1 Opportunities 3.1.2 Threats 3.2 Recommendation to identify the “right” investors 3.2.1 Targeting institutional investors with long investment horizons 3.2.2 Institutional shareholders with positive attitude toward mutual benefits 3.2.3 Institutional shareholders who have responsibility for their votes 3.3 Rcommendation on how to improve institutional investment to Vietnamese listed companies through good leadership and corporate governance practices 3.3.1 Quality of leadership 3.3.2 Quality of corporate governance 3.4 Action plan 3.4.1 Build the Board of Directors of high quality and professionalism 3.4.2 Build attractive but reasonable vision, objectives and annual bubsiness plan for the company 3.4.3 Make reliable financial statements 3.4.4 Improve the role of Internal control 3.4.5 Improve the abilities of risk forecast and management 3.4.6Disclosure policy Chapter summary: CONCLUSION REFERENCES APPENDIX EXPLORING THE ROLE OF GOOD LEADERSHIP AND CORPORATE GOVERNANCE PRACTICES IN IMPROVING INSTITUTIONAL INVESTMENT TO LISTED COMPANIES IN VIETNAM STOCK MARKET Nguyen Thi Yen Vy MBA Candidate, 2008 – 2010 School of business Vietnam National University, Hanoi Supervisor: Dr Ta Ngoc Cau Ha Nguyen, MBA INTRODUCTION The formation of Vietnam stock market in 2000 opened wide door for companies in raising fund to finance their business activities On this modern financial market, institutions has been and should be major players who pump funds and create market liquidity However, since 2010, market liquidity has been decreasing and this is attributed to the lack of “big players” on the market Therefore, it is high time to retain current institutional investors and attract new ones to help recover the slumping market One of the main factor to foster that desire is the listed companies’ excellent leadership and corporate governance, as they could help companies enhance investors’ confidence through mitigating agency problems, creating greater value for companies and therefore institutional investors in most cases are willing to pay a good premium for well led and governed companies This study, accordingly, explores the relationship between good corporate leadership - governance practices and the improvement of institutional investment It also aims to serve as a guide for those who wish to strengthen leadership and corporate governance practices in their organizations The study relies on a variety of data collection methods, interviews, observations and case study method This technique provided a comprehensive illustration of the effectiveness and necessity of good leadership and corporate governance practices in association with successful improvement of institutional investors The thesis consists of three chapters: CHAPTER 1: LITERATURE REVIEW CHAPTER 2: ANALYSIS AND ASSESSMENT ON THE APPLICATION OF LEADERSHIP CORPORATE GOVERNANCE PRACTICES IN VIETNAM LISTED COMPANIES CHAPTER 3: RECOMMENDATION CHAPTER 1: LITERATURE REVIEW Chapter provides an economic rationale for why leadership and corporate governance matters to the institutional investment It explored the relationship between good corporate leadershipgovernance practices, corporate performance and the improvement of investment from institutional investors 1.1 An overview of institutional investors 1.1.1 The impact of having institutional investors involved in a company’s ownership Having investment from institutional investors present both positive and negative impacts to listed companies The pros include the enhancement of companies’ performance and companies’ value (Fundamentally), the positive effect on the stock prices due to the enhance of market sentiment (Technically) Meanwhile, the cons include: The “myopia” affects, “herd behavior”, the take-over risk and innovation risk 1.1.2 What influences the investment decision of institutional investors (Determinants of institutional ownership) Each institutional investor has its own investment appetite, different trading and investing strategies But essentially, they are convinced by the success and potential of a company, which somehow can be translated into four basic points: Industry prospect, Financial data, Management and Plans Figure 1: Determinants of institutional ownership Industry Prospect Financial Data  Determine whether a company operating in that industry can stay well or be in trouble due to the common conditions of the industry  Growth  Good returns  ROE  Dividend yield  Liquidity  Risks Management Plan Companies’ plans are a vital channel for investors to derive their assumption, valuation and decision Good leadership and corporate governance lead companies into success 1.2 An overview of leadership and corporate governance 1.2.1 Leadership A working definition of Leadership says: “Leadership is the process of influencing others to understand and agree about what needs to be done and how to it, and the process of facilitating individual and collective efforts to accomplish shared objectives” But why leadership is necessary to companies? Drucker (1985) had the answer when he defined leadership as “the lifting of people’s vision to a higher sight, the raising of their performance to a higher standard, the building of their personality beyond its normal limitations” There are some key words should be borne in mind when mentioning Leadership: Leader, Leading and Vision From vision to final outcome, it takes leaders other factors to make outcome happens Such process can be visualized as follows, called “Leadership Causal Chain”: Figure 2: Leadership Causal Chain Follower Skills Inspiring Vision Quality + Productivity Follower effort Training + Coatching 1.2.2 Corporate Governance 1.2.2.1 Corporate Governance concept Unit profits Corporate governance has been widely researched across the world to provide guidelines and advisory to apply in reality One of the best known in this field was the OECD Principles of Corporate Governance, which had key influence on the development of corporate governance globally In the latest version “OECD Principles of Corporate Governance” 2004, corporate governance is defined as “one key element in improving economic efficiency and growth as well as enhancing investor confidence Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders” Similarly, the Report of the Committee and the Code of Corporate Governance (Singapore), 2001 wrote about corporate governance: “Corporate governance refers to the processes and structure by which the business and affairs of the company are directed and managed, in order to enhance long term shareholder value through enhancing corporate performance and accountability, whilst taking into account the interests of other stakeholders” J Wolfensohn, president of World Bank, made this concept more specific: “Corporate governance is about promoting corporate fairness, transparency and accountability” Basically, “Fairness, transparency and accountability” matter to corporate governance, especially in public company, which owned by a hundred shareholders and more, because with such a huge amount of owners, it is hard for all of them to get involve in companies’ management on a daily basis This remarkable feature raises the need for a mechanism where companies are operated by a group of certain people but conformed to the will of owners That is why nowadays, almost every public companies build their organizational chart as follow: Figure 3: Public companies organization chart General Shareholder’s Meeting Supervisory Board Board of Directors GOVERNANCE LEVEL CEO MANAGEMENT LEVEL Deputy CEO Deputy CEO Deputy CEO FUNCTIONAL DEPARTMENTS Departmental level staff Departmental level staff staff Departmental level staff staff Corporate governance is a system by which business corporations are directed and controlled, specifying the distribution of rights and responsibilities among different participants in the corporation in order to enhance long term shareholder value 1.2.2.2 The impacts of good corporate governance to listed companies Since the adoption of better corporate governance practices can improve the top level decision making processes and reduce the cost of capital, there is a good probability that better-governed companies can create more shareholder value through better operational result 1.2.2.3 Indicators of good governed companies OECD Principles of Corporate Governance made clear direction when they build indicators of good governed companies embracing six parts:  Ensuring the basis for an effective corporate governance framework  The rights of shareholders and key ownership functions  The equitable treatment of shareholders  The role of stakeholders in corporate governance  Disclosure and transparency  The responsibilities of the Board 1.3 Why good leadership and corporate governance practices can help companies in general and Vietnamese listed companies in particular to improve institutional investment  They become “an increasingly important factor for investment decisions  Mitigate agency problems  Create greater value for companies  Institutional investors would pay a good premium for well led and governed companies Chapter summary Chapter provides an economic rationale for why leadership and corporate governance matters to the institutional investment It explored the relationship between good corporate leadershipgovernance practices, corporate performance and the improvement of investment from institutional investors Generally, determinants of institutional ownership include: (1) Industry prospect, (2) Companies’ financial data, (3) Management and (4) Plans These are factors that attempt to demonstrate to investors the ability of a company to succeed in the future, to increase the value of its equity and to use its capital effectively Meanwhile, good leadership and corporate governance practices could help companies enhance investors’ confidence as they mitigate agency problems, create greater value for companies and therefore institutional investors in most cases are willing to make investment decision and pay a good premium for well led and governed companies CHAPTER 2: ANALYSIS AND ASSESSMENT ON THE APPLICATION OF LEADERSHIP-CORPORATE GOVERNANCE PRACTICES IN VIETNAM LISTED COMPANIES This chapter provides a snapshot on Vietnam economic outlook and securities market, makes assessment on the application of leadership and corporate governance practices in Vietnam and show three examples of Asia Commercial Bank (ACB), FPT Corporation (FPT) and Vinamilk (VNM) which have the ability to keep quality institutional ownership over years 2.1 Business environment in Vietnam 2.1.1 Vietnam Economic Outlook Vietnam is considered as one of the world’s fastest growing economies Its average real GDP growth rate was around 7% from 2000 to 2010 Figure 4: Vietnam GDP growth 2000-2011 Economic growth in Vietnam is expected to reach an average of 7.2% a year in 2011-2015 (forecasted by Economist Intelligence Unit), underpinned by strong growth in consumption, investment and exports Inflation year on year in 2011 was dramatically as high as 20.9% The government is trying to keep inflation rate in 2012 around 10%, before slowing to an average rate of 7.8% a year in 2013-2015 Investment: The disbursement of FDI in Vietnam was VND 11 billion in 2011, equivalent to that of 2010 Meanwhile, the total of FDI capital attracted in 2011 was USD 20 billion, increasing USD1.4 billion year over year 2.1.1.1 SWOT analysis Strengths  Vietnam has been one of the fastest – growing economies in Asia over the past decade with average growth rate of 7.4% year over year  The economic boom has lifted many Vietnamese out of poverty, with the official poverty rate in the country falling from 22% in 2005 to 9.45% in 2010 Weaknesses  Strong inflationary pressures, driven by sustained high oil price and trade deficit will curb growth prospects  Low labor productivity  The speed of domestic reforms, with intrusive bureaucracy and lingering corruption is likely to deter some investors Opportunities  The government is more determined to restructure the Vietnamese economy, and is pushing ahead with difficult reforms to the SOE sector  At the same time, being a member of the WTO; Vietnam will assert an all-out effort to create a favorable business environment to receive new waves of foreign investment Threats  In the short term: highly uncertain global environment  In the long term: Vietnam faces the need of new sources of growth to replace the key drivers that powered its robust growth in the past 2.1.2 Vietnam Stock Market Vietnam Sock Market is on its 12-year journey, since HOSE was opened in July 20th, 2000, followed by HASTC in 2005 and UPCOM in 2009 Vietnam has successfully developed its capital markets and turned them into effective fund raising channels of the economy, reducing its dependence on the traditional banking system However, Vietnam stock market in 2011 experienced a sharp decrease in both volume and value despite an increasing number of new listed stocks Volatile stock prices resulted in a big drop of overall market capitalization, making a loss of US $10 billion in a year Figure 5: Market trading volume (Unit: share) Source: SSC Figure 6: Market Trading Value (Unit: VND million) 10 Source: SSC Prior to 2005, institutional investors had not joined a lot on the stock market, and the market did not play the role of a real capital mobilization channel The next period 2007-2008 attracted a large amount of institutional investors joining Vietnam stock market Foreign invested capital kept flowing impetuously After 2008, the macro economy has shown uncertainties with high inflation, tightened monetary policies and slow growth Trading volume and value on both bourses plunged sharply Stock market was deeply immersed in a long volatile time In 2010-2011, the continued liquidity squeeze have been attributed to the lack of “big players” on the market, the same situation which was once seen in the period prior to 2005 Active participation of institutional investors might leave behind the stock market, making room for individual investors who were not capable of doing the main players thereon Big institutional investors were so discouraged of Vietnam’s stock market, which can be seen in the big offered discounts, while more and more capital withdrawal plans have been drawn up 2012 is the year when many close-end fund investing in Vietnam expires The total value of capital to be withdrawn in 2012 has been forecasted to reach VND 3,400 billion The figure would rise to VND 31,615 billion by 2013 before slightly decreasing by 2014 to VND 20,608 billion 11 2.2 Leadership and corporate governance in Vietnamese listed companies 2.2.1 Organization type influences the leadership and corporate governance style Traditionally, large Vietnamese companies were either State-owned enterprises (SOEs) or Private-owned enterprises (POEs) The image of SOEs was: large, bureaucratic, hierarchical and slow moving while that of POEs is small family businesses serving a local community clientele 2.2.2 Vietnamese companies are late developers in the area of leadership development Vietnam lags Western and many other Asian economies in terms of economic and market development As a result, Vietnam lags behind developed countries in modernising their management methods and corporate culture 2.2.3 A large majority of Vietnamese companies are either stateowned or family-owned Of the 20 largest companies in VNR500 in 2011, 17 are state-owned, are multinational and only one is half owned by state and half owned by a family In comparison, of the 20 largest listed companies in the United State and Europe, the number of companies which are owned by families are only and 1, respectively 2.2.4 Board of Directors, committees and CEOs issues Some common problems related to BoD and executive officers in Vietnam listed companies are: (1) Pluralism and (2) Shortage of leaders who can manage global companies 2.2.5 Ambiguous disclosure practice and weak transparency Some common mistakes related to disclosure and transparency are: (1) Late submission of financial statements or late information disclosure and (2) Privileged information and insider trading 2.2.6 Weak regulation to protect minority shareholders In Vietnam, the desire of government to promote short-term economic growth makes them less willing to go after larger corporations to protect minority shareholders 2.2.7 Weak risk management 12 No risk management “culture”, lack of executive commitment to risk management, fragmented risk management activities and lack of connection between corporate strategy and risk management are four big problems show how weak the risk management is in Vietnam listed companies Figure 7: General organizational structure of listed companies in Vietnam 2.2.8 Remuneration/Compensation In recent years, investors are increasingly concerned about the executive pay issues, as recent news has disclosed a lot of company failures were related to these issues Communication (Investor Relation) Communication between listed companies and Buy-side has dramatically changed over the years As big improvements has been made in companies’ knowledge, finding information on companies is easier now than ever before Thanks to the internet and abundant reference web sites, investors can step out of investing in the dark 2.3 Three cases of most attracted Stocks – ACB, FPT and VNM A limited number of companies in Vietnam have pursued successfully their leadership and corporate governance policy over the last decades Some outstanding names can be counted are Asia Commercial Bank (ACB), FPT Corporation Vietnam’s (FPT) and Vietnam Dairy Products JSC – known as Vinamilk (VNM) The author briefly discussed the experience of these companies which might provide valuable lessons for other Vietnamese listed companies 13 Chapter summary The Vietnam capital market has only started to develop in the last few years In the 12-year journey, the stock market is up and down, and the participation of institutional investors rises and falls Since 2010, the continued liquidity decreases have been attributed to the lack of “big players” on the market Therefore, it is high time to retain current institutional investors and attract new ones to help recover the slumping market One of the main factor to foster that desire is the listed companies’ excellent leadership and corporate governance However, there has been existing various issues on these matters They are: Ambiguous disclosure practice and weak transparency, weak regulation to protect minority share-holders, weak risk management, controversy remuneration /compensation of BoD and BoM, unprofessional Investor Relation activities All those shortcomings have contributed to weak leadership and corporate governance in the reality and resulted in a less attraction to institutional investors Given the challenges of Vietnamese listed companies on way to create themselves investors-darlings, there are many companies did it successfully for years Three typical examples counted are: Asia Commercial Bank (ACB), FPT Corporation (FPT) and Vinamilk (VNM) The common good-sides of these companies are their ability to keep quality institutional ownership through their good practices in setting and achieving targets to have sustainable growth, high calibre management team, reasonable remuneration scheme, good risk management, professional disclosure policy and investor relation Such good practices are worth to learn by other peers 14 CHAPTER RECOMMENDATION Chapter presents both opportunities and threats to the improvement of institutional investment, then provides recommendation and action plan to identifying and improving the institutional investment through good leadership and corporate governance practices 3.1 Opportunities and threats to the improvement of institutional investors into Vietnamese listed companies 3.1.1 Opportunities include: Continuing rapid development in the whole economy and in stock market; More players are coming into the markets; and more financial products and new services are being introduced in the market 3.1.2 Threats include: The fear from 2008’s global financial crisis, Impacts from other markets movement, Macro fundamentals need further improvement; and “Hot money” leads to speculation instead of investment 3.2 Recommendation to identify the “right” investors Listed companies should target institutional investors with long investment horizons, with positive attitude toward mutual benefits and ones who are responsible for their votes 3.3 Recommendation on how to improve institutional investment to Vietnamese listed companies through good leadership and corporate governance practices 3.3.1 Recommendation on quality of leadership 3.3.1.1 Quality of companies’ vision 3.3.1.2 Quality of company’s strategy 3.3.1.3 Execution of company’s strategy 3.3.1.4 Quality of leaders 3.3.2 Recommendation on quality of corporate governance 3.3.2.1 Constituting an independent and objective board 15 Figure 8: Comparison between Chairman and CEO’s responsibility and duties Chairman CEO Overall Responsibility: Ensure board sets and implements company's direction, strategy effectively Specific Duties:  Provide leadership to board  Plan board meetings, agendas  Ensure board receives proper information  Chair all board meetings  Ensure that all directors contribute  Drive discussion toward consensus  Determine composition structure of board  Chair shareholders' meetings  Act as company's lead representative: explain aims, policies to outside world Overall Responsibility: Responsible for performance of company as dictated by board's overall strategy Specific Duties:  Develop, implement strategy reflecting long-term objectives, priorities established by board  Assume full accountability to board for all aspects of company operations, performance  Maintain ongoing dialogue with board chairman  Build, maintain effective executive team  Put adequate operational-planning, financial-control systems in place  Closely monitor operation, financial results in accordance with plans, budgets  Represent company to major customers, professional associations Source: The McKinsey Quarterly , “How to Separate the Roles of Chairman and CEO”, 2004 3.3.2.2 Reasonable compensation/remuneration policy 3.3.2.3 Improve transparency 3.3.2.4 Improve communication quality 3.3.2.5 Improve risk management: Apply the “three lines of defense model”: 16 Figure 9: The “three lines of defense model” BoM Independent risk committee Internal audit CEO Functional Departments Dept.1 Dept.2 Dept.3 Dept.4 Dept.5 3.4 Action plan 3.4.1 Build the Board of Directors of high quality and professionalism - Directors should be chosen or voted with regard to the integrity of expertise, experience and ethics who can meet their duties of care and loyalty They are able to lead the company through favourable and unfavourable business climate - The BoDs then choose a qualified Board of Management who link the vision of BoD into reality - Establish a relative independence between BoDs and BoM where BoDs can vote against BoM if necessary The plurality of chairman and CEO must be seriously considered - Assure BoDs and BoM act for shareholders’ sake instead of their own Avoid unethical and illegal actions like internal trading, huge remuneration or making over-risky decision which harm shareholders’ interest - The ownership of institutional investors should be tracked on a regular basis to prevent hostile merger and acquisition In the other hand, this is to assess their investment is active or passive, whether they make valuable contribution into the company’s growth - Build policies to prevent the case that BoDs, BoM and their family members use company assets/goodwill for their own 17 interests or set up or have equity interest in other companies which compete with the principal company - Have a reasonable remuneration scheme for BoDs and BoM 3.4.2 Build attractive but reasonable vision, objectives and annual business plan for the company - BoDs establish company vision and objectives in the next one, two, five years and longer - Then BoDs build strategies to reach such targets - Communicate those vision, objectives and strategies to shareholders - Carefully set reasonable annual business targets (revenues, profit, dividend, etc.) so that company can attain them, instead of making troublesome explanation in the event that company either fails to achieve targets or surpass them abnormally 3.4.3 Make reliable financial statements - Companies should have an accounting policy which reflects the true value and true situation of the company - Financial statements preparation and approval should be well conducted to provide trust and appropriateness of these reports - Use independent and qualified external audits In Vietnam, the internationally recognized audit firms (such as Big 4) are of highest interest, especially by offshore funds Nevertheless, rotation of the independent external auditors is necessary, also 3.4.4 Improve the role of Internal control - The Supervisory Board has high level of independence to voice over abnormal or under-performed activities of the company They must have no business relationships with the company, or join in BoDs or BoM - They have their authority to attend any meetings of the Board as long as they maintain their membership and can request necessary information without having to receive approval from management 3.4.5 Improve the abilities of risk forecast and management 18 - Establish a specific team in charge of risk management, headed by CRO (Chief Risk Officer) - This team performed and monitored regularly the company’s management of risk - Build in advance a Disaster Recovery Plan to effectively resolve crisis 3.4.6 Disclosure policy - Disclosure of information must be complete, accurate and prompt in accordance with law, namely “Circular on disclosure of information on the securities market” No 38-2007-TT-BTC - Make annual report of good quality - Develop and maintain good relationship with shareholders and potential investors Carry out effectively two way communication between company and investors - Establish Investor Relations team in charge of investor communication - Regularly hold meetings with major shareholders and analysts of securities firms or funds to share business plan, update business results, projects status and other information to raise mutual understanding between the company and the investment community - Organize visit tours for investors and analysts to see and assess the company’s material facilities and how projects are being carried out - Build company’s website as one of the main communicating channels between the company and the investment community where all necessary disclosures of company are published and all questions and suggestions from investors are well received and answered 19 Chapter summary The Vietnam stock market has potential to develop thanks to the continuing rapid growth in the whole economy, the willingness of more players coming into the markets and the introduction of new financial products and services into the market However, threats also exist in the fear from 2008 global financial crisis, the impacts from other markets movement, short-term unstable macro fundamental elements and the speculation instead of investment from the so-called “hot money” In order to attract the “right” institutional investors, listed companies should pay attention to: (1) Quality of leadership and (2) Quality of corporate governance The author provided recommendation on how to improve the quality of leadership and of corporate governance, accompanied by a suggested action plan for detailed conduction The Action Plan included six parts: Build the Board of Directors of high quality and professionalism; Build attractive but reasonable vision, objectives and annual business plan for the company; Issues related to financial statements; Improve the role of Internal control; Improve the abilities of risk forecast and management; and Disclosure policy Leadership and corporate governance practices have made encouraging improvements in Vietnam and benefit many corporate leaders and their investors However, impairment still does exist and needs to be enhanced Such enhancement will not be easily achieved overnight unless listed companies have clear acknowledgement and firm commitment in fixing impediments and disincentives which block the necessary changes 20 CONCLUSION The thesis presents the good practices to attract institutional investment for the sustainable development of listed companies Among various practices which companies can apply, the author highly recommends to focus on excellent leadership and corporate governance as they have been filtered as calibre criteria to institutional investors As ownership and management of companies are and should be separated in listed companies, institutional shareholders easily concern with the agency problems and how the BoM can create greater value for companies The thesis demonstrates why good leadership and corporate governance can be the right answer to such concerns, and illustrates the cases of ACB, FPT and VNM The author analyses the current state of leadership and corporate governance in Vietnamese listed companies, and find out that various shortcomings exists Consequently, an action plan with relatively detailed measures is suggested in relation with Vietnamese legal framework and specific conditions of financial market in Vietnam The author knows that successful application of good leadership and corporate governance is an art of each company Nevertheless, the study shows that the theory and practical experience can be jointed to figure out a reasonable method for most companies The most importance is that the companies should well consider their own conditions and objectives to select what are most appropriate The thesis is suggestive of applying good leadership and corporate governance in Vietnamese listed companies to improve institutional investment Therefore, more research is needed to provide a better understanding from different viewpoints and other recommendations, especially for a frontier financial market like Vietnam 21 ... APPENDIX EXPLORING THE ROLE OF GOOD LEADERSHIP AND CORPORATE GOVERNANCE PRACTICES IN IMPROVING INSTITUTIONAL INVESTMENT TO LISTED COMPANIES IN VIETNAM STOCK MARKET Nguyen Thi Yen Vy MBA Candidate,... identifying and improving the institutional investment through good leadership and corporate governance practices 3.1 Opportunities and threats to the improvement of institutional investors into Vietnamese... improvement of investment from institutional investors 1.1 An overview of institutional investors 1.1.1 The impact of having institutional investors involved in a company’s ownership Having investment