THE IMPACT OF ACCOUNTING INFORMATION DISCLOSED BY LISTED COMPANIES ON INVESTORS’ DECISIONS ON VIETNAM STOCK MARKET

RESEARCH REPORT THE IMPACT OF ACCOUNTING INFORMATION DECISIONS ON VIETNAM STOCK MARKET Specialty: Accounting Code: KTQD/E2016.02 Leader of the group : MB.. MINISTRY OF EDUCATION AND TRAN

RESEARCH REPORT

THE IMPACT OF ACCOUNTING INFORMATION

DECISIONS ON VIETNAM STOCK MARKET

Specialty: Accounting Code: KTQD/E2016.02

Leader of the group : MB DANG THI THUY HANG

MINISTRY OF EDUCATION AND TRANNING

NATIONAL ECONOMICS UNIVERSITY



RESEARCH REPORT

THE IMPACT OF ACCOUNTING INFORMATION

DECISIONS ON VIETNAM STOCK MARKET

Specialty: Accounting Code: KTQD/E2016.02

Leader of the group : MB DANG THI THUY HANG

Members of the group: 1 PhD TS Pham Duc Cuong

2 PhD Tran Thi Nam Thanh

3 MBA Han Thi Lan Thu

4 MBA.Vu Thi Lan Huong

5 Ngo Thi Thanh Thuy

6 Nguyen Dang Kien

7 Nguyen Thi Hong Ngoc

TABLE OF CONTENT i

TABLE OF TABLES, CHARTS xxvii

INTRODUCTION 1

Chapter 1: LITERATURE REVIEW 5

1.1 Research in the World 5

1.1.1 Annual report is an important source of information for users to make economical decisions 5

1.1.2 The importance of reports in the Annual Report for the decision making of information users 7

1.1.3 The degree of importance of the information published on a specific annual report to the decision-making of objects using information 9

1.2 Studies in Vietnam 12

1.3 Research Gaps 13

Chapter 2: THEORETICAL FRAMEWORK AND RESEARCH DESIGN 16

2.1 Accounting disclosure 16

2.1.1 Definition of accounting disclosures 16

2.1.2 The role of accounting disclosure 18

2.1.3 Classification of accounting disclosures 18

2.2 Decision of investors 22

2.2.1 Definition of investor 22

2.2.2 Classification of investors 22

2.2.3 The role of investors 24

2.2.4 The objective of investors 24

2.2.5 Decisions of investors 24

2.2.6 Factors have impact on the decision making of investors 25

2.3 Related theories 28

2.3.1 Decision Theory 28

2.3.2 Agency Theory 29

2.3.3 Efficient Market Theory 29

2.4.1 Reserach model 31

2.4.2 Research hypotheses 45

Chapter 3: RESEARCH METHODOLOGY 47

3.1 Research procedure 47

3.2 Data collection and processing 48

3.2.1 Data collection 48

3.2.2 Processing of data 50

Chapter 4: RESULTS AND DISCUSSION 52

4.1 Testing reliability of the indicators (items) 52

4.1.1 Cronbach Alpha test 53

4.1.2 Kaiser-Meyer-Olkin (KMO) test and Exploratory Factor Analysis (EFA) 56

4.2 Evaluating the influencial degree of accounting disclosures in the decision making of individual investors in Vietnam Stock Exchange 62

4.2.1 The impact of general accounting disclosures (factors) on the decision making of investors 62

4.2.2 Comparing the degree of influence between the detailed accounting disclosures in the same group of general accounting disclosures 69

4.3 The impact of accounting information disclosed in Financial Statements on the decision making of investors 79

4.4 The impact of madatory and voluntary accounting disclosures on the decision making of investors 81

Chapter 5: IMPLICATIONS AND RECOMMENDATIONS 83

BASE ON THE RESEARCH RESULTS 83

5.1 The implications of the research results 83

5.1.1 Construction of accounting information system that affect the decision of the individual investors for diclosure in Vietnam’s stock market 83

5.1.2 The degree of influence of accounting information to the decisions of individual investors are different 84

5.2 Limitations of the study and directions for further studies 85

5.3 Recommendations from the implications of the research results 86

5.3.2 Recommendation for listed companies 89

5.3.3 Recommendations for securities firms 90

5.3.4 Recommendations for individual investors to participate in the stock market 91

CONCLUSION 92

APPENDIX 93

REFERENCES 130

REPORT SUMMARY 138

Table 2.1: 5 point Likert scale 32

Table 2.2: Items of Information about assests factor 33

Table 2.3: Items of Information about liabilities factor 35

Table 2.4: Items of Information about Stockholders’ Equity factor 36

Table 2.5: Items of Information about revenues and income factor 37

Table 2.6: Items of Information about expenses factor 38

Table 2.7: Items of Information about profit factor 39

Table 2.8: Items of Information about cash flows factor 40

Table 2.9: Items of Information about financial ratios factor 41

Table 2.10: Items of Information about accounting principles and policies factor .42 Table 2.11: Items of Forcast information factor 43

Table 2.12: Items of Others accounting disclosures factor 44

Table 4.1: The test result of reliability of items of Information about assets factor 53 Table 4.2: The results of Cronbach's Alpha test 55

Table 4.3: The first KMO and Bartlett's Test 56

Table 4.4: Items of Group 1 57

Table 4.5: Items of Group 2 58

Table 4.6: Items of Group 3 58

Table 4.7: Items of Group 4 59

Table 4.8: Items of Group 5 59

Table 4.9: Items of Group 6 59

Table 4.10: Items of Group 7 60

Table 4.11: Items of Group 8 60

Table 4.12: Items of Group 9 60

Table 4.13: Items of Group 10 61

Table 4.14: Items of Group 11 61

Table 4.15: The descriptive statistic results of the influencing degree of each general accounting information 62

Table 4.16: Comparation of the influencing degree of 65

Table 4.17: The impact of Financial Statements on 79

the decision making of individual investors 79

Table 4.18: The impact of mandatory and voluntary disclosures on the decision making of individual investors 81

Charts: Chart 1.1: Overview of external research 5

Chart 2.1: The corporate disclosures and related relationships 17

Chart 2.2: Classification of accounting disclosures 22

Chart 2.3: Proposal research model 31

Chart 3.1: The research process 48

Chart 4.1: Component score of items of Information about assets factor 70

Chart 4.2: Component score of items of Information about liabilities factor 71

Chart 4.3: Component score of items of Information about stocks and dividends 72

Chart 4.4: Component score of items of Information about sales 73

Chart 4.5: Component score of items of Information about expenses 74

Chart 4.6: Component score of items of Information about profit 74

Chart 4.7: Component score of items of Information about cash flows 75

Chart 4.8: Component score of items of Information about financial ratios 75

Chart 4.9: Component score of items of Information about accounting policies 76

Chart 4.10: Component score of items of Forcast information 78

Chart 4.11: Component score of items of Other accounting disclosures 78

Research Idea

Today, in order to survive and develop in the increasingly internationalizedworld, listed companies must be disclosed as much information as they can tosatisfy the demands of investors In the corporate information disclosures,accounting information disclosures which typically are presented on the financialstatements, as a basic source of validity information to be used by different group ofusers in making investing decision, including investors

There are many studies on corporate information disclosures around theworld, even in the developed countries (US, UK, Australia, Japan, New Zealand, )

or in the developing countries (Iran, Jordan, Malaysia, Nigeria, Bangladesh,Zimbabwe, Vietnam, Tunisia, ), and in the emerging economies (UAE, Greece,China, Singapore, Hong Kong, ) Most of these researchs try to find out the impact

of factors such as firm size, structure of ownership, auditing company-big 4, etc on

corporate disclosures (Ahmed et al 1994, 1999; Akhtaruddin et al 2008, 2009; Barako et al 2006; Buzby, 1975; Chau et al., 2001; Chen et al., 2000; Cooke, 1992; Donnelly et al., 2008; Firth, 1979; Gerald et al., 2002; Gul et al., 2004; Haniffa et al., 2002, Ho et al., 2008; Inchausti, 1997; Jiang & Habib, 2009; Makhija &Patton, 2004; Meek et al., 1995; Owusu-Ansah, 1998; Raida & Hamadi, 2008; Soh, 1996;

Tạ Quang Bình, 2012; Wallace et al., 1995; Xiao & Yuan, 2007) In the contrast,

number of studies on the influence of corporate disclosures on the decision making

of users is not too much, for example, the researchs of (Abbad, 2012; Abu-Nassar &Rutherford, 1996; Al-Ajmi, 2009; Al-Sawalqa, 2012; Anderson, 1981; Baker &

Haslem, 1973; Chen et al., 2001; Mirshekary & Saudagaran, 2005; Norman, 2012).

In fact, there are not too much researchs on mandatory disclosures, while manystudies concentrate on voluntary disclosures In addition, researchers around theworld not only study on corporate disclosures, but also on non-profit organizations’disclosures, for example, Flack and Douglas (2007) investigate the disclosed

information by charity organizations in Australia, or Gordon et al.(2002) compare

the level disclosures of the public universities and the private universities in the US

The majority of disclosed information researchs concentrate on the disclosedinfrmation of listed companies, on the other hand, the minority of studies aboutinformation disclosures of small and medium companies Researchers also study thedisclosed information of banks (Maingot & Zeghal, 2008), and some other specialindustries as oil, gas industry (Craswell & Taylor, 1992).

Besides, there are studies how to measure either Madatory Disclosure Indexand Voluntary Disclosure Index or Aggregate Disclosure Index in a country or a

stock exchange market (Adelopo, 2011; Al-Akra et al., 2010; Benjamin & Stanga,

1977; Omar & Simon, 2011; Mohamed & Zahirul, 2010) In summary, the issue ofinformation disclosures is still very rich nutritional field for researchers (Healy &Palepu, 2001), and being concerned in the new stock exchange market

However, according to some recent studies of Ngo Thu Giang (2011), DangThi Thuy Hang (2014, 2011) published accounting information of companies listed onVietnam's stock market currently not meet the needs of users In fact, in the Ho ChiMinh Stock Exchange (HOSE), there is usually a high number of listed companiesthat infringe the disclosed information regulations, for example, they do not providefull, reliable disclosures on time In 2011, there were only 24 companies, but thisnumber was higher than 8 times in 2012 (204 companies) and on December 4, 2013was 153 companies, according to The Report of HOSE (2013) Additionally, theVietnamese financial statements are prepared under the historical cost principle thanthe fair value, this is one of the barriers slowing down the listing progress of a number

of Vietnamese listed companies in abroad in order to increase in capital whendomestic funds is limited Another reason prevent the companies attracting moneyfrom investors is the quality of financial statements, because there is a differentexistance between this statements before and after to be audited This situation makesinvestors losing their belief what the companies present in financial statement, and inturn the Vietnamese stock market has a down trend during a long time

Therefore, research on the impact of accounting information released to theissuance of investors on Vietnam's stock market is really very necessary andmeaningful in both theory and practice In theory, the study will enrich thetheoretical frameworks of the relationship between published information of listedcompanies and the decision making of investors in the stock market in the emergingeconomy like Vietnam In the practice, the results of the study will help theprofessional organizations in the promulgation of accounting standards, financialreporting standards and auditing standards; the State management agencies in thepromulgation of regulations related to information disclosure of listed companies onthe Stock Exchange; the listed companies in disclosing of useful information forinvestors; and securities companies in providing services to clients are investors Inaddition, investors can also be based on the research results to make effectiveinvestment strategy.

Research Ojective

The objective of the study is to explore and examine the influence degree ofaccounting disclosures of listed companies in making decision of investors inVietnam Stock Exchange

Research questions

In order to reach the objective, the study try to find out the answers for thesequestions as below:

Question 1 : What are accounting disclosures having impact on the decision

making of investors in Vietnam Stock Exchange?

Question 2: How does the disclosed accounting information affect on the

decision making of investors in Vietnam Stock Exchange?

Research subject and scope

The research subject of the study is the impact of accounting disclosures ondecision making of individual investors in Vietnam Stock Exchange

Research scope: In the study, disclosed accounting information is allinformation provided by accounting department and presented in financial statements

of listed companies, including mandatory and voluntary disclosures Research sample

is a group of individual investors who are selected by ramdom method from thepopulation of all individual investors participating in Vietnam Stock Exchange

The survey period: 1 month, when and after listed companies in Vietnam StockExchange disclosed their annual financial statements (from April 14th, 2015 to May

15th, 2015)

Research contributions

The study comprises some contributions as below:

(1) In this study, authors only concentrate to research on the impact ofaccounting disclosures on decision making of individual investors in Vietnam StockExchange

(2) The authors has developed a system of indicators to measure the publishedaccounting information classified by the content of information, financial statementswhere information was presented, mandatory or voluntary disclosures, unlike the pastresearchs measured directly the affected score of financial statements or publishedinformation of companies by 5-point Likert scale Therefore, the research results areable to make conclusions for the population and indicate the difference in theinfluencing degree of various accounting disclosures in decision making of investors

(3) Under accounting perspective, the authors have developed a system ofaccounting disclosures that have impact on decision making of individual investors inVietnam Stock Exchange This system includes 11 general accounting information(factors) and 82 detail accounting information (items)

(4) The results from the quatitative analysis have found out some differentpoints compared with the similar studies in the past Firstly, the accounting informationpresented in Balance Sheet (BS) has the least impact on decision making of invetorsinvesting in Vietnam Stock Exchange, compared with other financial statements, while

it has the most important for investors in the other stock markets around the world.Secondly, the information disclosed in Statement of Cash Flows has the influencingscore only behind Insome Statement (ranking at the first) This indicates that cash flows

in companies are now more important for individual investors when they makeinvesting decisions than in the past Thirdly, voluntary disclosures have more impact

on decision of investors than madatory ones, which is has not been found by theprivious researchs

The structure of report

The report comprises 5 chapters: Chapter 1: Literature Reviews, Chapter 2: Theoretical Frameworks and Research Design, Chapter 3: Research Methodology, Chapter 4: Results and Discussions, Chapter 5: Implications and Recommendations.

Chapter 1: LITERATURE REVIEW

Accounting information is as part of the information disclosed in the annualreports of companies-enterprises Research into the disclosed information ofcompanies and influence of those information on Decision of investors attractedinterests of many researchers from both internal and external of country

1.1 Research in the World

The overview of reseacrh into the important of company-disclosedinformation for different information users including invetors is illustrated in thefigure 2.1 below

Chart 1.1: Overview of external research

1.1.1 Annual report is an important source of information for users to make economical decisions

Information from annual reports (Financial statements – Annual report,report of chairman of managing board, auditing report…) of companies have been

proved that they have significant influence on the decision of information usersincluding finacial analysts, individual investors, institutional investors, bank creditstaff, securities brokers…

Annual report is the most important soucre of information for informationusers when making a decision rather than the other sources like rumour, directmeeting with company managers or company visiting; press and magazine; advicesfrom securities brokers, friends and relatives, from securities brokers and financialconsultants; daily stock prices; stock index These werer proved by a number oftypical studies by Abu-Nassar and Rutherford (1996), Al-Ajmi (2009), Al-Razeenand Karbhari (2004, 2007), Al Sawalqa (2012) and Mirshekary and Saudagaran(2005) These studies were carried out in different countries like: Jordan, Bahrain,Saudia Arabia, Iran Annual reports are also supposed as one of the most importantinformation for decision making according to the studies by của Anderson (1981),Buzby (1974), Naser, Nuseibeh and Al-Hussaini (2003)

Although the annual reports have been recognized as the information sourceshaving influence on the decision making of the users, the information content inthese annual reports has not met the requirements of information users According

to Abu-Nassar and Rutherford (1996), all groups of information users agreed thatinformation disclosure by companies in Jordan is inappropriate, annual reports need

to provide further information in order to meet the requirements of informationusers and companies need to disclose additional information rather than thatpresented in annual reports Similarly, in the study by Mirshekary và Saudagaran(2005), most of interviewees supposed that annual reports were the most importantsources of information, but reports had not provided enough necessary informationbecause the information is not detail and delayed to disclose However, this is theonly study that found the relationship between the fact of information disclosure inannual reports by companies and the expectation of information users to theinformation disclosure Mirshekary and Saudagaran (2005) measured therelationship between the fact of information disclosure and the ranking of differentgroups of information by investigators The results indicated that the relationshipwas not significant, this means that the information requirements of different using

groups were not presented in annual reports of companies in Iran Nevertheless, thisstudy just investigated the information at the present time and had not consideredthe analytical and predicted information that were always expected by users.

In contrast, a few studies showed that annual reports have not muchinfluence on decisions of investors as research by Baker and Haslem (1973) with aninterview of 851 individual investors participated Stock Exchange Market inWashington DC (US), or no effect on decisions of investors as studied by Abbad(2012), Al-Attar and Al-Khater (2007), Norman (2012)

In summary, most studies showed that annual reports are an important source

of information in the decision making of information users in general, andespecially investors in particular However, annual reports of companies were said

to be confusing (Abu-Nassar and Rutherford, 1996; Al-Attar and Al-Khater, 2007),lacking of necessary information and delaying in disclosure (Mirshekary andSaudagaran, 2005) Therefore, investors had to focus on other sources ofinformation to get the right investment decisions, such as: newspapers; stateannouncements; advices from friends, relatives, co-workers, stock brokers,consultants; and even from rumors (Al-Ajmi, 2009; Al-Razeen and Karbhari, 2004,2007; Baker and Haslem, 1973; Mirshekary and Saudagaran, 2005); and in somecases, the sources of this information were also more important than annual reports

1.1.2 The importance of reports in the Annual Report for the decision making of information users

Annual reports played a critical role in the Decision making of informationusers However, the influence degree of reports in the Annual Report is different.Most studies showed that Balance Sheet (BS), Income Statement (IS) were reportsthat were more interested than the others by the information users, especiallyinvestors Anderson (1981) used a questionnaire to interview 300 institutionalinvestors from 15 companies in Australia (response rate was 63.08%), with thequestion: "While the decision to buy, sell or hold any ordinary shares, the content ofannual reports how important?"; Results showed that: (1) the decision to hold or sellshares of the IS, BS and Notes is the most important part, the address of theChairman, report sources of equity, the Report of the Director Director, summarizes

the financial situation, the accounting policies, the audit report on the level of lesserimportance; (2) the decision to buy shares: IS, BS, Notes and address of theChairman, report sources of equity - Statement of Owners' Equity is the mostimportant part.

Likewise, Nicholls and Ahmed (1995), have investigated four groups inBangladesh, the BS, IS, report sources of equity and Audit Report - Auditor'sReport are reported best annual reports According to Abu-Nassar and Rutherford(1996), IS and BS is the most important factor to the consensus of the five groups inJordan use information, audit reports are also considered crucial Wallce (1988)studied six groups in Nigeria to use information, unity between the groups is nothigh but the audit report is the most important report

Abu-Nassar and Rutherford (1996), have used questionnaires to ask for 100investor organizations and 200 individual investors, 100 loan officers, brokers 27securities, 36 experts (total 463, 224 replies accounted 48.38%), mostly male,average age 38, with college degrees, has extensive experience in accounting orfinancial accounting, or professional degree in accounting The survey resultsshowed that individual investors and institutional investors are the most widely read

is IS (1), BS (2), and the third option is the audit report (3) on the head privateindividuals and Notes (3) for the institutional investors Also according to thisstudy, in order of annual reports, investors understand individual choices are: Theaudit report (1), Report of the Board of Directors (2), BS, IS (3); while investorsreorganization are: IS (1), the audit report (2) Notes to the financial statements (3).The content of the report is said to be suitable are: IS (1), BS (2), Notes (3) forindividual investors; and with investors organized as BS (1), IS (2), Notes (3) Bothindividual investors and institutions agree that the most reliable BS then the IS (2)

According Mirshekary and Saudagaran (2005), the audit report is consideredimportant in developing countries may be related to problems in the reliability ofthe country's annual reports According to their research, the IS audit report, BS isthe most important part of 3 annual reports Mirshekary research and Saudagaran(2005), has used 81 indicators published information (items) to ask 7 group usinginformation from various annual reports, such as bank credit officers, academics,

the private securities brokerage, investment banking staff, organizational investors,auditors, tax officials Researchers have used 5 point Likert scale (Likert scale 5-).Mirshekary and Saudagarank (2005) surveyed 500 people showed the influence ofthe content of annual reports to the decision of the user information in the order asfollows: IS (1), the audit report (2), BS (3), Notes (4), CFS (5), accounting policy(6), Report of the Board of directors (7), historical information and abstracts (8).

According to Al-Ajmi's research (2009), Bahrain investors in assessing theimportance of the Annual Report as follows: BS (2), IS (1), CFS (3), the report ofthe Board (9) , audit Report (4), Notes (5), past information (6), Note BS and IS (6),accounting policies (6)

In summary, the majority of studies show that BS and IS are the mostimportant reports for user information from annual reports However, the study alsopoints out that the audit report user information to be considered more importantthan the BS and IS, and this is probably explained by the report that publicenterprises father was not enough reliability so users report more confidence in theaudit report In addition, recent studies show that users are more concerned aboutNotes because they can find the information to be published in addition to otherreports, according Mirshekary and Saudagarank, (2005) Thus, whether the results

of this study is true of Vietnam's stock market To find the answer, the author willconduct examinations Hypothesis: Information from the report on the results oflisted companies trading influential than any other financial statements to theissuance of individual investors to participate in the stock market Vietnam(hypothesis 4)

1.1.3 The degree of importance of the information published on a specific annual report to the decision-making of objects using information

Following research on the level of importance of reporting in annual reportsaffect the information users, the researchers sought to understand how importanteach disclosed specific information on decision of the information users Typicallythe research of Wallace (1988) and Mirshekary and Saudagaran (2005) Two studieswere conducted to verify the actual assessment of the target groups using differentinformation about the level of importance of the items are presented in the annual

reports of enterprises Specifically, Wallace (1988) used the Likert scale of 5 levels

to assess the importance of the information published by 109 6 groups usingdifferent information in Nigeria Results recovered from 470 questionnaires(response rate was 39.2%) showed that all the information is important to ask allobjects used, no difference between the groups for reviews the level of 49/109important information at a significant P-value ≤ 0.05 Thus, most of the information

is mentioned in the study by Wallace (1988) was the assessment team how important

is the same, this proves the information is presented on the Annual Report hasbasically met diverse uses of the different objects The study also showed the level ofimportance of each information for the entire sample and each group of users

Similarly, Mirshekary and Saudagaran (2005), the study of the level ofimportance of the items have been published or desire to be announced by the listedcompanies, has found 16 critical items, 55 important items and 10 items lessimportant to survey 245 participants from 7 different target groups use theinformation in Iran In it, the three most important factors are the cost of goods sold,the total revenue and revenue details, details of business profits and profits, otherlosses This shows that the IS was chosen as the most important report for theDecision of the user information Results of the study also indicated that 64information (79%) were 7 groups using assessment information of importance whendeciding is the same at 5% significance and 17 remaining information ( 21%) is nodifference between the groups

Unlike studies, researchers have only looked at the extent of the informationimportant to the issuance of the two or a group of objects using information.Research by Baker & Haslem (1973) and Al-Ajmi (2009) study only theinformation that individual investors need to invest in the stock market of QD inWashington D.C (USA) and in Bahrain Baker & Haslem (1973) has collected £

851 replies on critical level of 33 information service of the given investment QD.Also with 5-level Likert scale, with 1 being not important and 5 is very important,the authors have found three very important information (average values ≥ 4), 15information relative weight (average value in the range of 3 to 4) and 15 lessimportant information (average values in the range of 2 to 3), for investors in the

survey As a result of this study, the investors are mainly concerned about theinformation on forecast revenue, profitability, the situation of businesses and relatedindustries Limitations of the study's findings reflect survey sample only inferencebut not for the overall study.

According to Al-Ajmi's research (2009), individual investors participated inthe survey were divided into two groups as large investors group (owner of 10,000shares or more) and a small group of investors (Base possession of less than 10,000shares) The study also surveyed by postal questionnaire sent to 800 individualinvestors in the stock market in Bahrain at a rate of 42.6% responded that, using 5-level Likert scale Complete information 20 respondents are important to investorssurveyed and there is no difference between the two groups large and smallinvestors in assessing the level of the most important information (12 / 20) Inparticular, the total revenue items such as equity and is said to be the mostimportant, followed by net profit, then the costs and dividends paid, followed bytotal assets, the book value a stock, financial policies, and revenue in previousyears, for individual investors Research also indicates that investors wish toprovide more information than what the companies have announced However,research has not really compare the difference between the two groups investors inassessing the degree of importance of some information (8/20) and the amount ofinformation is small compared to respondents a lot of information is presented inannual reports of enterprises as well as the desire of investors

In stark contrast to these studies, Chen C, Chen S, and Su (2001) focusesonly study the impact of information returns to the issuance of stock marketinvestors in Shanghai (China) Research results show that accounting earningsinformation is meaningful when the company profitable but does not make sensewhen the company losses The study also pointed out that although the stock market

is still young and information on reporting inappropriate but accounting information

is meaningful in the decision of Chinese investors, and accounting information makesmore sense for companies that stocks with high liquidity However, the authors alsofound that limitations of this research is focused on studying the effects of theaccounting profit to the issuance of the investors that no research to other factors

The majority of the world's research shows that information on theprofitability of enterprises is very important for the audience to use the information,particularly investors However, some case studies such as the study of the Beaver(1968), Morse (1981), Pate and Wolfson (1984) pointed out that the statement ofprofit is the source of information is limited by the time of the announced toinvestors (in Han et al., 1992) This means that the statement of profit only reallymake sense to work out when it was announced timely to meet the need ofinformation users.

Thus, in a lot of information, to make investment decisions, investors needinformation about the financial situation, financing, forecast management,investment projects, and financial policies Investors can access this informationfrom various sources such as the report of the exchanges, the media, governmentagencies, and one of the important sources of information such as annual reports.The researchers were trying to understand what kind of information and sources ofinformation that the subjects related to business, particularly investors need Theinformation is believed to be important include: the current profitability and futuredividend policy, support from the government, the share price and future growth,the Board members, the activities business (Abdelsalam, 1990 and Abdulla, 1992,quoted in Al-Ajmi, 2009; Al-Attar Al-Khater & 2007; Al-Razeen & Karbhari, 2004,2007; Mirshekary & Saudagaran, 2005)

provided by the small and medium enterprises in Vietnam In addition, the studyalso found that the information on cash flow and forecast information is consideredimportant for the audience to use the information but not presented or not presentedfull on the SFH This is one of the first studies on the impact of accountinginformation to the issuance of the user information in the economic conditions ofVietnam conversion However, limitations of the study is the small sample sizes (19respondents interviewed in 6 groups using information both inside and outside thecompany), this may reduce the generalizability of the results research results.

Similarly, the doctoral thesis of Le Tu Oanh (2012) also refers to theinformation published in the annual reports of listed companies In this study, thequestion of "Information on the Annual Report may affect the investment decisions

of his (her)?", Then to 87% in a total of 77 investors answer is "Yes" However,studies stop at the descriptive statistics for the sample is not large enough, theresearch results have not been tested for the entire master investors on Vietnamstock market Therefore, it is necessary with the quantitative research on this issue

In addition, the study of factors affecting the information published by thecompanies listed on Vietnam's stock market has also been implemented by anumber of research students Ta Quang Binh (2012) studied the factors affectingvoluntary disclosure of companies listed on Vietnam's stock market and its impact

on financial markets Similarly, Ngo Thu Giang (2014) studied the effect of thecharacteristic elements of the listed company to the level of disclosure and itsconsequences to the stock market in Vietnam These studies have used quantitativeresearch methods to assess the impact of different factors (size businesses, auditfirms, business management structure, ownership, ) to the information published

in annual reports companies

In addition, research on the behavior of individual investors Nguyen DucHien was also done in 2012 The study surveyed 500 individual investors onVietnam's stock market, and the results showed that the level and sex education thataffect investors’s decision This result is a base to help build the first author of thesurvey questionnaire in this thesis

Thus, starting from the results and limitations of the research mentioned above,will be essential when the authors carried out research on the impact of the accountinginformation released to the issuance of Vietnamese investors in the stock market.

1.3 Research Gaps

By reviewing domestic and international research, the author found that moststudies only focused on the importance of annual reports in relation to otherinformation sources and assessment of the importance of annual reports forinformation users The studies were approached by the way of asking directlyinformation users about their awareness about how importance specific reports ofthe annual reports are but no measurement has been developed for each factor that

is each report Therefore, the author will develop a system (indicator) to measurefactors that affect the decision making of information users

Besides, there have been a number of studies assessing the importance of theinformation to be published in the annual reports enterprises for the economicdecision groups use different information in general and investors in particularinvestment However, the study was only stopped in the individual assessment ofeach public information, not information group according to criteria appropriate tobring back the clear results and more meaningful, especially for with the publication

of information enterprises, the state management agencies to promulgate regulationsrelating to information disclosure Therefore, it is necessary to conduct research onmethods to categorize the information published in a scientific way in order to bringresearch results more useful and more practical

In addition, in recent times, the researchers divided the information usually

DN published in two groups: the mandatory public information and voluntarilydisclosed information In particular, the announced voluntary attract more attention

by the subjects using the information, because the voluntary publication was therelatively good compliance companies according to regulations, standards.However, studies in the past have not find out the difference in the degree ofinfluence between the information required and voluntary information published bythe companies For that reason, the author will clarify this issue in the study

In addition, previous studies have been conducted in developed countries, thedeveloping and emerging economies However, no adequate studies on the issue ofthe influence of the information published to the issuance of the object using theinformation in countries with economies in transition Research by Chen et al(2001) in China only unique research information affecting decision profits ofinvestors on the Shanghai stock market; and research Dang Duc Son et al (2006) inVietnam is a qualitative study exploring the nature of the information on thefinancial statements of small and medium enterprises are the object using theinformation for that agency important when deciding Therefore, for more completetheory, it is necessary to conduct quantitative research on this issue in the stockmarket of Vietnam with economic transformation.

Finally, previous studies have not tested the specific differences between thegroups using the general information and investor groups have differentcharacteristics on the level of information important for businesses announcedmaking economic decision

Therefore, it is essential when conducting a separate study on the impact ofaccounting information released to the issuance of stock market investors inVietnam Because of the following reasons: first, accounting information is thebasic information about the financial situation as well as their businesses, so thatwill help a lot of investors in evaluating companies and put the investment decision;

In addition, information is presented on the financial statements of the company aremainly accounting information (information provided by accountants) Second,investors are subject mainly using information published by listed companiescompared to subjects using other information; Therefore, research on the impact ofaccounting information to investors’ decision also shows the businesses haveannounced more useful information and meet the information needs of thisaudience Third, there should be a similar study in countries with economies intransformation such as Vietnam, where the majority of listed companies are state-owned enterprises to be equitized should also focus on issues not yet announcedinformation The result of the research hope will not only enrich the theory of

disclosure but also have practical implications in the disclosure of the company onthe stock market and the stock market in Vietnam analogy.

2.1 Accounting disclosure

2.1.1 Definition of accounting disclosures

Corporate Disclosure include all information released by firms to interestedparties (public), almost of which are firm external users, and is the most importanttool used by firms to communicate with or connect to the public (stakeholders)(Adina & Ion, 2008) Disclosure may be legally mandatory disclosure throughFinancial Reports, footnotess, management discussion and analysis, and otherregulatory filings (Healy & Palepu, 2001); or may be voluntarily made by firmsthrough management forecast, analysers’ reports, workshops, press publication,websites and other reports of firms (Adina & Ion, 2008) Besides, according toAdina & Ion (2008), there are disclosures about firms by informationintermediaries, such as financial analysts, industry experts, and the financial press;and traditionally, the corporate annual report has been seen as the primary source of

corporate information disclosure Among disclosures in corporate annual reports,disclosures generated by corporate accountants play an important role.

Accounting disclosure includes all information related to financial position andbusiness performance of companies and are provided by the accounting department.Typically, this disclosure is presented on a system of reports by the accountingdepartment provides The report by the accounting system provides include:management accounting reports, financial statements and tax reports In particular,management accounting reports are not made public to the outside which is only usedwithin the enterprise, service of the Decision of the managers within the company Thereport was prepared on the basis of tax forms and regulations as well as tax calculationprinciples of state agencies FS (BS, IS, CFS, Notes) are widely publicized companiesfor the objects using information outside the company However, accounting disclosuremay also be published in other reports of the annual reports of firms, especially theinformation voluntarily disclosed

Thus, in the strict sense, accounting information published is understood asinformation provided by the accounting system primarily through the financialstatements of the company This information is usually presented under theprovisions of Standard Financial Statement presentation, accounting standards, andregulations of the state bodies authorized such Securities Commission, the Ministry

of Finance So, it was announced the compulsory accounting Besides, to theinformation published is really useful for the user information, the companiesshould publish more information to support the use of the Decision of theinformation which investors ; it was announced the voluntary accounting

There are researches which show that disclosure is the communicationmethod in accounting, the company announced their situation to society throughcommon forms are: the Annual Report, particularly the financial statements (Omarand Simon, 2011) This is shown in Chart 2.1

Chart 2.1: The corporate disclosures and related relationships

Information user is any organization or individual related to businessoperations of enterprises, including objects within companies (such as the board, theboard of directors, the management of enterprises, management financialcompanies, .) and external audiences DN (such as investors and privateinstitutions, creditors, banks, suppliers, agencies and legislation, State managementagencies, ) According to Benjamin and Stanga (1977), the user group informationincluding financial analysts, shareholders present and the future, banks, creditorspresent and future, the workers, the unions , customers, suppliers, present andfuture, tax planners, the management bodies, the social activist groups, and thepublic Solmons (1986) suggest that there are at least five groups of users withdifferent interests and different information requirements: investors and creditors;manager; auditor; Policy makers; and the public (quoted in Omar and Simon, 2011)

2.1.2 The role of accounting disclosure

Accounting disclosure through annual reports plays the role of a bridgebetween firms and external user (see Chart 2.1) Corporate disclosure in corporateannual reports is the offical disclosure with the validity higher than that of othersources such as press, rumour, … Therefore, corporate accounting disclosure is soimportant to disclosure users, especially external users who are going to makefinancal decisions According Cooke (1989), disclosure of sections in corporateannual report are relevant and essential to the decision making of users who can’taccess information sources as they wish; and if relevant, essential information is notdisclosured, the users’ decision will not be the best ones Corporate disclosure isnessecary for an effective capital market and once disclosure is transparent andaccurate, information disturbance can be minimized

Corporation

Preparers Annual Report

Disclosures

Internal Users External Users

Users

2.1.3 Classification of accounting disclosures

Based on different criteria, corporate accounting disclosure can beclassified in different groups, concretely:

Classification of accounting disclosures base on financial statements: Financialreports include a balance sheet accounting (Balance Sheet - BS), reports business results(Income Statement - IS), Cash Flow Statement (Statement of Cash Flows - CFS), andNotes financial statements (Notes), according to Martha (1995) If the financialstatements based on accounting information presented, the published accountinginformation can be divided into the information presented above: (see Chart 3.2)

- Balance Sheet: the information reflected in assets, liabilities and equity

- Income Statement: information on revenue, income, expenses and profits

- Statements of cash flows: information on the cash flow of businesses

- Notes to the financial statements: additional information clarified thecontent was presented in the other financial statements

The objective of financial reporting is fundamental to provide usefulinformation for making economic QD lot of objects using information such as theinstitutional investors, individual investors, stockbrokers, employees credit banks,auditors, financial analysts, government officials, customs agents, researchers andother objects (Abu-Nassar and Rutherford, 1995, 1996; Al-Ajmi, 2009; Al- Razeenand Karbhari, 2004, 2007; Chatterjee, Mirshekary, Al Farooque and Safari, 2010;Mirshekary and Saudagaran, 2005; Naser et al., 2003, Benjamin and Stanga, 1977).Useful information for investors is information to assist them in predicting thefuture activities of the enterprise (Scott, 2002)

Financial reports should provide information useful to investors, creditorspresent and future, other objects in the Decision relating to investment, loans andother similar Decision (paragraph 34, IAS 1 , 2008) Information should be easy tounderstand so that anyone can understand the relative business activities andeconomy when they want to learn about the information to the relative level ofdiligence In view of the economic information, financial statements play a key role

in an efficient capital market According to the Commission Issued FinancialAccounting Standards - Financial Accounting Standard Board (FASB), the

Commission promulgate the International Accounting Standards - InternationalAccounting Standard Committee (IASC), the fundamental purpose of accounting is

to meet requirements of the financial markets (FASB, 1978; IASC, 1994; cited inChen et al., 2001) Financial Statement is an important source of information fordifferent stakeholders, especially reports of listed companies

Classification of accounting disclosures according to the nature of information

If based on the requirements of the state bodies on the information presented,the accounting information published are classified into two groups (see Chart 3.2)

- Required information published (hereinafter referred to as announcedmandatory - Mandatory disclosures) that information must be disclosed as required bylaw and regulations of state agencies, Securities and Exchange Commission (Adian andion, 2008) Owusu-Ansah Under (1998), published include all mandatory informationdisclosure requirements under the provisions of the Companies Act, Securities andExchange Commission, accounting standards Announced a mandatory publication inaccordance with the provisions of the financial statements, accounting standards, andlaws relating to disclosure requirements in the financial statements (Chinese VersionRelated News, 2009) The importance of mandatory publication is the root of thepurpose of the financial statements, according to Omar and Simon (2011) In Vietnam,the publication is often presented in the annual reports as stipulated by the StateSecurities Commission, stock exchanges, financial statement presentation StandardsInternational Accounting Standards and International Accounting Standards Vietnamaccounting, enterprise accounting regime issued by the Ministry of Finance

The purpose of the compulsory publication is to satisfy the information needs ofthe user information The characteristics of this form of publication include: the issuer

is a company; Recipients are shareholders, employees, creditors, buyers and otherobjects; According to regulations, such as business law, accounting law, accountingstandards, standards of financial statement presentation, the generally acceptedprinciples (GAAP); Contents include: structure and purpose of the report; Periodannounced: annual, semiannual, quarterly, regular; Published methods: printing orthrough the company's web site (Adian and Ion, 2008)

In the issue of mandatory publication, studies have generally shown that therequired financial statements have provided new and relevant information forinvestors (Kothari, 2001) However, the recent empirical research has shown adecline in the relevance of the items in the financial statements over the past 20years (Collins et al., 1997; Chang, 1999; Ely and Waymire , 1999; Francis andSchipper, 1999) However, these studies also show that the mandatory publicationstill plays a very important role in the Decision According Leuz and Verrecchia(2000), the standard for better disclosure would reduce the cost of capital of thecompany, so it also provides more valuable information for investors.

Companies are required to disclose information required by the regulations

of law, besides, the company may choose to report more or voluntary disclosure ofinformation if they feel is beneficial (Most, 1982 and Peterson & Plenborg, 2006,quoted in Omar and Simon, 2011)

- Information voluntarily disclosed (hereinafter referred to as the announcedvoluntary - Voluntary disclosures) is the accounting information is not required topublish, companies voluntarily announced eg forecasting the future or informationpast (5-10 years) in terms of revenue, expenses, investments and amortization, profit,dividends, inventory, cash flow, liabilities, equity, bad debts, By Adina and ion(2008), announced voluntary information is published exclusively by companies thefreedom to choose, as the additional information to be published, are encouraged topublish According to Peterson and Plenborg (2006), announced voluntary is bothfinancial information and non-financial companies that benefit when announced butnot required by the regulation (quoted in Omar and Simon, 2011) VoluntaryDisclosure used when announcing the compulsory can not be effective

Announced voluntary help enterprises more attractive investors and attractmore funds and reduce turbulence information According to Chinese VersionRelated News (2009) compiled from published sources, voluntary likely: Improveenterprise management; Increased integration and reliability of the informationprovided by businesses; Reduce borrowing costs and raising equity; Boost liquidityand stock price; Improve the image of social responsibility of companies

However, voluntary publication also has a number of issues such asdisclosure of information matching users avoid too much information published,confusing information; relationship cost - benefits (Costs - benefits) for companies;ensure confidentiality issues for businesses and how measurement is used Oftenvoluntarily published a review of the principle cost - benefits, according to Al-Htaybat & Napier (2006); Ferguson et al (2002); Jan (1998); Levinsohn (2001)(quoted in Omar and Simon, 2011) Milgrom (1981) found: assuming bothannounced costly or not cost a dime, the entire publication will still occur becauseinvestors think the company will not announce there can have very bad information.Therefore, a company will benefit rather than harm when disclosure Lang &Lundholm (1993) has pointed out that the company will have the return on equity ishigher than the announcement of more voluntary Additionally, Healy et al (1999)have discovered the fact that the increased level will increase the equity of thecompany, followed by the liquidity of shares

Chart 2.2: Classification of accounting disclosures 2.2 Decision of investors

statements

Classification of accounting disclosures base on financial

An investor is an organization or a person that have investing activities Inthe Stock Exchange, investor is whoever paticipate buying, selling and holdingsecurities (including stocks, bonds, certificates of investment funds, etc).

2.2.2 Classification of investors

In researches on the impact of disclosure on investors, investors normally aredivided in 2 groups: the group of individual investors who aim at gaining individualbenefit, and the group of institutional investors who have institutional status, use theinstitutional properties for investment of which interest or loss belongs toinstitutions but not to any individual Some studies both individual investors andinvestor organizations (Abu-Nassar & Rutherford, 1995; Al-Attar Al-Khater &2007; Naser et al 2003), have studied again divided into two groups as smallinvestors and large investors such as Al-Razeen research & Karbhari (2007), alsoAbdelsalam (1990) (quoted in Al-Ajmi, 2009), Al-Abdulqader et al (2007) (quoted

in Al Sawalqa, 2012) and Al-Ajmi (2009) only investigate individual investors anddivided into large and small investors In the study by Norman (2012), smallinvestors with investment amount of less than 10 million native (Local Currency-LC), the amount of investment from 10-50 million (LC) is the average investor and

50 million (LC) is the largest investor Also according to this study, the small investors

do not use the financial information when making investment QD, and big investorsare more sensitive to the use of financial information compared to the average investorand small However, Al Sawalqa (2012) suggest that combined into a group will bemore accurate because: first, there is nothing to ensure that small investors will always

be in small groups (eg small investors can become a major investor in the day);secondly, there is no clear definition of the two groups, so there are no clear criteria todistinguish between these two groups; finally, the number of shares owned isdependent primarily on the financial capacity of investors

Besides, research has divided investors into professional investor group arequalified investors certain knowledge of finance, accounting and investment, with adegree in those areas, or experienced certain investments, usually investors held; and thegroup of non-professional investors as investors analyze, often emotional investment ormarket fundamentalist, crowd psychology was dominated A significant number ofstudies have evaluated the behavior of professional investors and many of them haveused the MBA students as objects representing professional investors; Investors are

qualified investors with an MBA (Frederickson & Miller, 2004, quoted in Malgharni,Yusoo & Arumugam, 2011) Joshi and Abdulla (1994), has conducted a survey in Indiafor both investors have professional qualifications - including professional accountingpractice certificates and accounting teacher cum early investment, and investors do nothave professional qualifications - including those who are not professional accountants,

no practicing certificate nor the teachers accounting and investor, to find out theinformation requirements for annual reports of these objects

Also, according to the author, the participating investors the stock marketcan be divided into: Investors with little experience, and investors have a lot ofexperience in terms of time to enter the market; Based on the market that investorsparticipate, the investor group in the primary market and the group of investors inthe secondary market (as HOSE, HNX)

The way investors categorize the above as a basis for developing thequestionnaire author (part question about personal information investors) and todevelop hypotheses to find the differences between the groups different investors

2.2.3 The role of investors

Investors have a key role in setting up and affecting the operation of the stockmarket Investors are essential components among other factors that setting up themarket such as brokers, securities centress, Securities and Exchange Commission,listed companies Investors provide capital to companies through the purchase orholding shares or bonds issued by companies listed on the stock market Investors arecreditors if they are bond holder and are company owners if they are holding stocks

The decision of the investors to keep a very important role in the stability ofthe stock market - one of the largest markets and most influential financial marketnext to the gold market, the real estate market, the market Forex Investors play animportant role in providing capital for the financial markets; Therefore, professionalaccountants should pay more attention to the provision of information to meet therequirements of this object (Anderson, 1981)

2.2.4 The objective of investors

The purpose of investing is to make money from investment funds The aim ofthe investor is not exempt from this common purpose Investors desire to profit fromfunds invested in the stock market They expect that after a certain investment timethey will gain a value (money amount) higher than initial value which was invested

(because of the time value of the monetary) This added value can be obtained from:first, dividends from stocks or interest from bonds distributed by the issuingcompanies, or second, usually a larger portion of profits from the business (buying ,selling) of securities on the stock market This is the basis for the authors to designthe survey questionnaire (Appendix 1) and set up the hypotheses about thedifferencies between groups of investors with different investment purposes.

2.2.5 Decisions of investors

The decision of investors is to invest in the financial markets Wheninvesting in the stock market, this decision is reflected in the buying, selling orholding (buying, selling or holding) types of securities such as stocks and bonds

Therefore, risk acceptance is an important part in making decision ofinvestors According to Garling et al (2010), when making decision in a condition

of uncertainty, people are affected by perceptions of risk - risk of subjective ratherthan objective risk Therefore, the financial crisis could bring unpredictableconsequences for those who prefer to accept financial risks (Garlinget et al., 2010)

According to Keynesian doctrine Beauty Contest was first discovered byKeynes in 1936, and has recently been further developed by Morris and Shin in

2006, the QD investors not depend on ourselves but on the QD base predict whatother investors think (quoted in Gao, 2007)

Also, Zopounidis and Doumpos (2002) after conducting quantitative researchhas concluded that investors including institutional investors and the investors areindividuals interested in evaluating the operability of the company to cater for theinvestment decision

From the above characteristics, research has showed that decisions ofinvestors are affected by many different factors, including factors outside of theenvironment as well as internal investors themselves

2.2.6 Factors have impact on the decision making of investors

Decisions of investors in the stock market are influenced by many factors,including the individual elements of the investors (gender, qualification,psychology), there are factors beyond the control of investors as the source ofinformation that can be accessed by investors

 Characteristics of investors

o Investor ability, qualification

In the past there have been studies on the impact of the capacity of investors

to buying behavior, selling shares on the stock market According to research byBaker and Haslem (1973), the information used will be influenced by theknowledge and qualifications of investors and qualified investors tend to trademore Nguyen Duc Hien (2012) also found that education levels affect theparticipation of investors QD Vietnam stock market Conversely, Norman (2012)did not find any connection between education and the use of financial information

o Investor psychology

There have been many studies about the psychological impact on investors'behavior Using questionnaires with 250 investors in the stock market of Delhi,India, Chandra (2009) have found the psychological factors that affect the decisions

of investors, such as over-confident, family tendencies, sensational, affectingcapacity, herd mentality, trusted source, self-discovery Similarly, mass psychologythat affects QD buy or sell the shares of investors trading on the New York StockExchange (Garling et al, 2010) and the impact on the behavior of stock marketinvestors to participate in Vietnam ( Nguyen Duc Hien, 2012)

o Gender

Wang (1994) conducted a research on the impact of gender on investmentdecision, and the results show that women are cautious in making investment QDwith lower risk than men so profitable well below expectations (quoted in Schubert

et al., 1999) Also, according to recent research by Nguyen Duc Hien (2012),gender affects decision of investors on Vietnam stock market

 The information is provided by various information sources

Decisions of investors to invest based on the information they gathered fromvarious sources Here are some sources of information were found to be important

to work out decisions of investors

o Annual reports

Annual reports are an important source of information has great impact ondecisions of investors around the world such as Jordan, United Arab Emirates (SaudiArabia), Sweden, China, Bahrain, Kuwait, Australia (Abu-Nassar and Rutherford,1996; Al-Ajmi, 2009; Al-Razeen and Karbhari, 2004, 2007; Al Sawalqa, 2012;Anderson, 1981; Hellman, 2005, quoted in Al Sawalqa, 2012; Mirshekary and

Saudagaran, 2005 ; Naser, Al-Hussaini and Nuseibeh, 2003; Xinhua News Agency,2006) However, in some other studies, the annual reports is not an important source ofinformation for investors in some countries such as the USA, Greece, Qatar (Abbad,2012; Al-Attar and Al- Khater, 2007; Baker and Haslem, 1973; Desoky, 2010 (quoted

in Al Sawalqa, 2012); Norman, 2012)

Besides, the study of Al-Razeen and Karbhari (2004, 2007) and Hellman(2005) showed that the interim reports also affect the investors QD (quoted in AlSawalqa, 2012)

o Non-official information

Investors are not only influenced by mainstream news sources such as annualreports, but also influenced by non-mainstream sources such rumors (Abu-Nassarand Rutherford, 1996; Al-Ajmi, 2009; Al-Attar and Al-Khater, 2007; Al-Razeenand Karbhari, 2004, 2007; Al Sawalqa, 2012; Baker and Haslem, 1973; Mirshekaryand Saudagaran, 2005; Norman, 2012), oral information (Mirshekary andSaudagaran, 2005)

o Press information

There have been many studies show that information from newspapers andmagazines (Abu-Nassar and Rutherford, 1996; Al-Ajmi, 2009; Al-Attar and Al-Khater, 2007; Al-Razeen and Karbhari, 2004, 2007, quoted in Al Sawalqa, 2012; AlSawalqa, 2012; Baker and Haslem, 1973; Desoky, 2010, quoted in Al Sawalqa,

2012, Xinhua News Agency, 2006); and special publications may also affect QD ofinvestors, according to Al-Razeen and Karbhari (2004, 2007)

o Information in the stock market

The statistical information of the stock market (Abu-Nassar and Rutherford,1996), the stock price every day (Mirshekary and Saudagaran, 2005; Al Sawalqa,2012), or stock market index (Abbad, 2012) have an impact on QD's Investors.Through questionnaires and statistical analysis, Abbad (2012) showed that QD ofinvestors based on the trend of the stock market index in Jordan According to thisstudy, the short-term investors rely more heavily on the index, while long-terminvestors are not

o Advice from nearby people

Investors affected by the advice of many people when making investmentdecision Firstly, their decision influenced by the advice of those who have professionalqualifications in the field of investment securities as securities broker (Abu-Nassar andRutherford, 1996; Al-Ajmi, 2009; Al Al-Khater -Attar and 2007; Al Sawalqa, 2012;Baker and Haslem, 1973; Mirshekary and Saudagaran, 2005); consultant (Al-Ajmi,2009; Al-Attar and Al-Khater, 2007); experts (Al-Razeen and Karbhari, 2004, 2007);banker (Al-Ajmi, 2009) Second, investors also advice or talk to relatives and friends(Abu-Nassar and Rutherford, 1996; Al-Ajmi, 2009; Al-Attar and Al-Khater, 2007; Al-Razeen and Karbhari, 2004, 2007; Al Sawalqa, 2012; Baker and Haslem, 1973;Mirshekary and Saudagaran, 2005); colleagues (Abu-Nassar and Rutherford, 1996)when making investment decision.

o Information from the contact with companies

Sources of information obtained from company visits and contact withmanagers (Abu-Nassar and Rutherford, 1996; Al-Attar and Al-Khater, 2007; AlSawalqa, 2012; Anderson, 1981; Hellman, 2005 (quoted in Sawalqa al, 2012);Mirshekary and Saudagaran, 2005) and information directly from the company (Al-Razeen and Karbhari, 2004, 2007; Naser, Al-Hussaini Nuseibeh and 2003) is alsoimportant for the QD's Investors Perhaps the information from other sources is notreliable enough, so investors need to verify the actual directly to businesses throughobservation, discussion with the management company

 Other factors

In addition, the Decision of the investors is influenced by personal expectations(Al-Ajmi, 2009), advertising, product nature of the company, management company(Norman, 2012)

2.3 Related theories

Decision of investors into the stock market is a complex decision is explained

by a number of different theories However, the following theory is the main theoryhelps explain the relationship impact of accounting information disclosed to theinvestors in the stock market decision

2.3.1 Decision Theory

Decision theory is the theory of decision making This is not a theory thatthere is a unique aspect of the study, which has a lot of research on different aspects.Modern theories of decision has been developed from the mid-20th century with

academic instruction The different areas, decisions theory be adapted in differentdirections such as research scientists in politics care about the election rules andaspects related to the issuance of the election vote tri, the psychologists to study thebehavior of individuals when the decision However, the study still has about arelatively large interference and the researchers in different fields still use manydifferent methods to solve a problem that is common decision

According to the Decision Theory, Decision making process involves severalsteps sequentially According to Brim et al (1962), the process consists of 5 steps:(1) identify the problem, (2) collect information, (3) make the choice possible, (4)evaluate each option select, (5) select a best choice to make Thus, the collectionand evaluation of information is an important step in the process of the Decision(quoted in Hansson, 2005) This is the scientific basis for the authors studied theeffects of accounting information disclosed to the investors decision

Also, according to the Decision Theory, when the decision should considerthe utility Accordingly, the law of the basic decision is choosing a plan with thehighest utility, if there are two alternatives equally high, then select one of twooptions - maximizing rule The majority of economic theory is based on theassumption that individuals will always maximum in conditions and is oftenmeasured in money (Hansson, 2005) Therefore, to achieve optimal decision,investors must rely on the information they get and the more information, the moreaccurate the more true given decision This is the basis for modeling the author ofthe thesis research (see Chart 2.3)

However, the Decision is not only theoretical research on Decision making

by individuals but also the development of the rule of the decision groups share anumber of characteristics or a certain (Cf Freeling, 1984, quoted in Hansson, 2005)

In short, the thesis applies the Decision Theory as the basic doctrine ofmodeling research and the research hypothesis In addition, the research model wasbuilt on the basis of representation theory

2.3.2 Agency Theory

Agency Theory has been a lot of scholars applied in various fields of studyincluding accounting such as Demski & Feltham (1978) In the 60s and the early'70s, the economy (eg, Arrow, 1971; Wilson, 1968) has found that there isdisagreement over the sharing of risks between individuals or Interest groups The

theory was developed by many researchers, but the core essence of the theory is toconsider the relationship between the two groups representing opposing interests(principal - agent) This relationship is always a conflict because the relevant issuessuch as benefits, costs, information asymmetry.

Therefore, this theory will be applied in the modeling of the dissertationresearch Investors (principals) are objects used by enterprises accountinginformation (agent) announced to make investment decision As creditors (if bondinvestors) and business owners (if investment shares), investors are always lookingforward to provide information companies full, accurate and timely information onthe financial situation as well as business activities of enterprises Even so,companies can because of concerns related to the cost - benefit, the secrets ofenterprises that have been unable to meet the expectations of investors To minimizethis asymmetry problem, the thesis will focus on accounting information interestedinvestors; thereby helping enterprises with a scientific basis for appropriatesolutions in order to provide information to meet the needs of investors

2.3.3 Efficient Market Theory

Efficient market theory is a theory of finance with a content that's importantresearch on the relationship between stock market prices of securities andinformation related to stocks According to this theory, the stock market is said

to be effective when the price of the securities to reflect the full range ofinformation that can be accessed regarding that stocks (Fama, 1970) In anefficient stock market, the price of the stock will be adjusted in a timelymanner and quickly with new information about stocks makes the current price

of the stock are fully reflect all the information about that stocks Eugene Famaprofessor of the University of Chicago is a pioneer in the development of thistheory According to Fama (1970), effective market three models: the form ofweak, medium and strong form format On the weak form efficient market(Weak-form), the current price of the stock reflects the full information on thesecurities which were published in the past Medium format market efficiency(Semi-strong form) is the market in which the current price of the stock hassuffered the full impact of the information on which CK was announced in thepast and as well as the information has been announced (eg published on-yearprofit, stock split, ) In strong form efficient market (Strong form), the price

of the stock reflects all information about stocks is published in the past andpresent, including internal information; investors or investment groupsexclusive access to all relevant information and affect the stock price Thus, theefficient market where at any given time, market participants have access to allthe new information about stocks and immediately reflected in the price of suchsecurities

However, efficient market theory does not explain persuade somephenomena, such as the sharp decline in the price of the stock in a certain timeperiod, or the theory is true only for each individual rather stocks quite right withthe entire stock market Long-term stock market volatility has significantlyreversed, but many economists say it is the result of the impact by the psychology

of the investors participating in the market In this case, behavioral finance theorywill be used to explain the phenomenon instead of the efficient market theory Inaddition, experimental studies have demonstrated weak form efficient market andmedium format may be true; however, some studies suggest that the market can noteffectively in strong form

In the study, efficient market theory is applied when building models andhypotheses Research model based on the assumption that all participating investorsVietnam stock market will have access to the accounting information that listedcompanies should publish and public enterprises accounting information that affectthe decision of the investors is reflected in the stock price

2.4 Research design

2.4.1 Reserach model

Based on previous studies and the Decision Theory, Theoryrepresentative, efficient market theory (as argued in section 2.3), the author hasdeveloped a research model as follows:

Chart 2.3: Proposal research model

In the research model, accounting information disclosed by listed companiesare divided into 11 groups according to aggregated information content informationreflects the financial position and business results of the company Each groupgeneral information is measured by the specific accounting information, all have 91specific information (Chart 2.3)

According to Chart 2.3, Decision of investors affected by the accountinginformation published from the listed companies Each general accountinginformation is a factor (factor) of the decision affect investors The author wasbased on previous studies on information disclosure of listed companies and itseffect to the issuance of the object using the information in general and investors inparticular, as well as the provisions on disclosure information applies to companieslisted on Vietnam's stock market by the State agency authorized; to build a system

of indicators (items) measurement for each factor accounting information Keyindicators system is a system of specific accounting information currently published

by listed companies or desire to be announced by the investors Each indicator ismeasured by Likert scale of five (5) levels

Decisions of individual investors

Information about assests

Information about Profit

Information about cash flows

Information about financial

ratios

Information about accounting policies Information about forcast

Other Information