Transparency and disclosure practice in accounting reports of stateowned enterprises: A case study of Vietnamese irrigation and drainage management companies

isclosure score is 0.8824 while the least level of disclosure score with average disclosure score is 0.0000. 3.2. Item Disclosure Table 3 represent the level of disclosure of various items over the period of study by the selected companies. Table 3. Item Disclosure Score of VIDMCs Item/Year 2015 2016 2017 The development strategy of the enterprise. 0.0115 0.2184 0.1954 The enterprise's five-year production, business and development plan. 0.0690 0.4598 0.4598 The annual production and business plan and development investment of the enterprise. 0.1379 0.4713 0.5517 An annual report on the results of implementation of the annual production and business plan and the latest three (3) years up to the reporting year. 0.2759 0.4943 0.3908 A report on results of performance of public-utility tasks and other social responsibilities (if any). 0.3563 0.4598 0.4483 Annual reports on the reorganization and renewal of enterprises. 0.2759 0.4598 0.5057 The Report on the current state of corporate governance and organization. 0.2874 0.5057 0.4023 Board member qualifications, selection process, including board diversity policies, roles on other company boards and whether they are considered as independent by the SOE board. 0.2874 0.5057 0.3793 Six months financial statement. 0.0690 0.3563 0.3333 Annual financial report of the enterprise. 0.3793 0.5632 0.6667 Annual financial statements have been audited by an independent external audit. 0.3793 0.5632 0.6782 Material foreseeable risk factors and measures taken to manage such risks. 0.1724 0.1954 0.2069 Financial assistance, including guarantees, received from the state and commitments made on behalf of the SOE, including contractual commitments and liabilities arising from public-private partnerships. 0.2759 0.3908 0.5172 18 Item/Year 2015 2016 2017 Material transactions with the state and other related entities. 0.3448 0.5287 0.6437 Report on the salary and bonus regime of the enterprise. 0.2759 0.5632 0.6667 The remuneration of board members and key executives. 0.2759 0.5747 0.6667 Abnormal information. 0.0000 0.0805 0.0460 Source: Author The results show that the level of disclosure of items increased over the years, so VIDMCs increasingly comply with the regulations of the state. However, the level of disclosure of these items is not high, the highest disclosure level is only 0.6782 (Annual financial statements audited by an independent external audit, 2017). In 2017, nearly 70% of companies disclosed Annual financial report, Report on the salary and bonus of the enterprise and the remuneration of board members, which are followed by the annual production and business plan and development investment of the enterprise, Annual reports on the reorganization and renewal of enterprises and financial assistance. Whereas, the development strategy of the enterprise, Material foreseeable risk factors and measures taken to manage such risks and abnormal information have been least disclosed by the sample companies. Furthermore, the score of remaining items (The enterprise's five-year production, business and development plan, an annual report on the results of implementation of the annual production and business plan and the latest three years, the Report on the current state of corporate governance and organization, Board member qualifications, selection process, Six months financial statement) is between 0.3 and 0.5. 4. Conclusions and Policy Implications The main purpose of the article has been to analyse the level of VIDMCs’ compliance on the disclosure of accounting reports in accordance with state regulations. Although the level disclosure by VIDMCs improved during the study period, the current level is not high and there are major differences between the companies. The most important information that VIDMCs have least provided in the annual reports consists of: The development strategy of the enterprise, material foreseeable risk factors and measures taken to manage such risks and abnormal information. Also, non-financial information (such as the salary and bonus regime of the enterprise, Financial assistance, including guarantees, received from the state and commitments made on behalf of the SOE, material transactions with the state and other related entities) is only disclosed in general, the content of the report is not quantified. The low level of disclosure by VIDMCs has been explained by some following reasons. Firstly, the legal regulations of the state are not strong enough for VIDMCs disclosure adequately and qualitatively. Secondly, managers as well as accountants in VIDMCs lack aware of the importance of publishing accounting reports. Finally, residents who use public goods do not care about accounting reports which are as tools to assess performance of VIDMCs. 19 Bases on the research result, we have some suggestions should be made to policy regulators and managers: ● The sanctions stated in the law must be applied on the violating companies that are not committed to disclosure ● Holding workshops and conferences to raise awareness about the importance and role of VIDMCs and the importance of accounting disclosure in guiding and raising accounting awareness which support making the rational decision. ● Drawing the attention of citizens to the importance of disclosed information in VIDMCs to monitor which VIDMCs manage and use public resources. 5. References Aljifri, K. and K. Hussainey (2007), ‘The determinants of forward-looking information in annual reports of UAE companies’, Managerial Auditing Journal, 32 (9): 881-894. Beretta, S. and Bozzolan, S., (2004), ‘A framework for the analysis of firm risk communication’, The International Journal of Accounting, 39, 265-288. Botosan, C. A. (1997), ‘Disclosure Level and Cost of Equity Capital.’, Accounting Review, 72: 323-49. Botosan, C. A., & Plumlee, M. A. (2002), ‘A re-examination of disclosure level and the expected cost of equity capital’, Journal of Accounting Research, 40 (1), 21-40. Brown, S., Hillegeist, S. A., & Lo, K. (2004) ‘Conference calls and information asymmetry’ Journal of Accounting and Economics, 37(3), 343-366. Bushee, B. J., & Noe, C. F. (2000), ‘Corporate disclosure practices, institutional investors, and stock return volatility’, Journal of Accounting Research, 38, 171-202. Bushman, Robert, Joseph Piotroski, and Abbie Smith (2004), ‘What determines corporate transparency?, Journal of Accounting Research , 42, 207–252. Byard, D., & Shaw, K. W. (2003), ‘Corporate disclosure quality and properties of analysts’ information environment’, Journal of Accounting, Auditing and Finance, 18(3), 355-378. Davide Scaltrito (2015), ‘Assessing Disclosure Quality: A Methodological Issue’, Journal of Modern Accounting and Auditing, Vol. 11, No. 9, 466-475. Dr. Deepa Mangala, Isha (2015), ‘Disclosure through Annual Reports: A Study of Indian Corporate Sector’, International Journal of Research in Management, Science & Technology (E-ISSN: 2321-3264) Vol. 3, No. 2, April 2015 Entwistle, G.M. (1999), ‘Exploring the R&D disclosure environment’, Accounting Horizons, 13 (4): 323-341. Florin A.(1999), ‘Does the Invisible Hand Need a Transparency Glove? The Politics 20 of Transparency’, Washington, DC in Annual World Bank conference on development economics; 163-184 Development economics. Francisco Bravo Urquaza, Maria Cristina Abad Navarro, Marco Trombetta (2009), ‘Disclosure indices design: does it make a difference?’, Revista de Contabilidad-Spanish Accounting Review Vol. 12 - Nº 2 Pag. 253-278. Gelb, D. S., & Zarowin, P. (2002), ‘Corporate disclosure policy and the informativeness of stock prices’ Review of Accounting Studies, 7(1), 33-52. Hackston, D., & Milne, M. J. (1996), ‘Some determinants of social and environmental disclosures in New Zealand companies’ Accounting, Auditing and Accountability Journal, 9(1), 77-108. Healy, P. M., Hutton, A. P., & Palepu, K. G. (1999) ‘Stock performance and intermediation changes surrounding sustained increases in disclosure’, Contemporary Accounting Research, 16(3), 485-520. Healy, P., Palepu, K., (2001) ‘Information asymmetry, corporate disclosure, and the capital markets: a review of the empirical disclosure literature’, Journal of Accounting and Economics 31, 405–440. Hussainey, K.; T. Schleicher and M. Walker (2003), ‘Undertaking large-scale disclosures studies when AIMR-FAF ratings are not available: the case of prices leading earnings’, Accounting and Business Research, 33 (4): 275-294. Imhoff, E. A. (1992). ‘The relation between perceived accounting quality and economic characteristics of the firm’, Journal of Accounting and Public Policy, 11(2), 97-118. Khanna, Tarun, Krishna G. Palepu, and Suraj Srinivasan, (May 2004), ‘Disclosure Practices of Foreign Companies Interacting with U.S. Markets.’Journal of Accounting Research , 42, no. 2 Lang, M. H., & Lundholm, R. J. (1996), ‘Corporate disclosure policy and analyst behavior’, The Accounting Review, 71(4), 467-492. Marston, C. L. and Shrives, P. J. (1991), ‘The Use of Disclosure Indices in Accounting Research: A Review Article’, British Accounting Review, Vol. 23, pp.195-210. Mohammed Hossain (2008), ‘The Extent of Disclosure in Annual Reports of Banking Companies: The Case of India”, European Journal of Scientific Research, ISSN 1450-216X Vol.23 No.4 (2008), pp.660-681 Omaima Hassan and Claire Marston (2010), ‘Disclosure Measurement in the Empirical Accounting Literature: A Review Article’, Economics and Finance Working Paper Series, Working Paper No. 10-18. Robb, S. W. G.; Single, L. E., and Zarzeski, M. T. (2001), ‘Nonfinancial disclosures across Anglo-American countries’, Journal of International Accounting 10 (1): 71-83. Saeed Askary, Beverley Jackling, (2005) ‘Corporate financial disclosure practices in 21 Asian and Middle Eastern countries’, Asian Review of Accounting, Vol. 13 Issue: 1, pp.45- 72, Sengupta, P. (1998) ‘Corporate disclosure quality and the cost of debt’, The Accounting Review, 73(4), 459-474. Snjezana Pivac, Tina Vuko & Marko Cular (2017), Analysis of annual report disclosure quality for listed companies in transition countries, Economic Research- Ekonomska Istraživanja, voL. 30, no. 1, 721–731. Tara Vishwanath, Daniel Kaufmann (2001), ‘Toward Transparency: New Approaches and Their Application to Financial Markets’, The World Bank Research Observer, vol. 16, no. 1 (Spring 2001), pp. 41–57. Tarun Khanna Krishna, Palepu And Suraj Srinivasan (2003), ‘Disclosure Practices of Foreign Companies Interacting with U.S. Markets?’, https://dash.harvard.edu/handle/1/29660925 The Organisation for Economic Co-operation and Development (OECD, 2016), ‘Transparency and disclosure measures for state-owned enterprises (SOEs): Stocktaking of national practices’, Antiguo Palacio del Arzobispado / Museo de la SHCP, Mexico City. The Organisation for Economic Co-operation and Development (OECD, 2017), ‘Disclosure and Transparency in the State-Owned Enterprise Sector in Asia: Stocktaking of National Practices’ The Organisation for Economic Co-operation and Development (OECD, 2015), ‘Guidelines on Corporate Governance of State-Owned Enterprises’ The Public Sector Accounting Standards Board’s (2011), ‘Conceptual framework task force, consultation paper 1, characteristics of public sector entities. Verrecchia, R. E. (2004) ‘Policy implications from the theory-based literature on disclosure, The economics and politics of accounting (pp. 149-163). Oxford Press. Vo Thi Thuy Trang, Nguyen Cong Phuong, (2015), ‘The Disclosure in the Annual Reports by the Listed Companies on the Ho Chi Minh Stock Exchange’, International Journal of Business and Social Science; Vol. 6, No. 12. Welker, M. (1995) ‘Disclosure policy, information asymmetry, and liquidity in equity markets’, Contemporary Accounting Research, 11(2), 801-827. Williams, S.M. (1999), ‘Voluntary environmental and social accounting disclosure practices in the Asia-Pacific region: An international empirical test of political economy theory’, The International Journal of Accounting, 34 (2): 209-238.