DSpace at VNU: Corporate governance in Vietnam and in state owned enterprises after equitization

Corporate governance in Vietnam and in state owned enterprises after equitization Đỗ Lan Hương Khoa Quản trị Kinh doanh Luận văn Thạc sĩ ngành: Kinh doanh và quản lý; Mã số: 60 34 05

Corporate governance in Vietnam and in state

owned enterprises after equitization

Đỗ Lan Hương

Khoa Quản trị Kinh doanh Luận văn Thạc sĩ ngành: Kinh doanh và quản lý; Mã số: 60 34 05

Người hướng dẫn: TS Cấn Văn Lực

Năm bảo vệ: 2010

Keywords: Quản trị kinh doanh; Doanh nghiệp nhà nước; Cổ phần hóa; Quản lý điều hành

Content

TABLE OF CONTENTS

ACKNOWLEDGEMENT i

ABSTRACT ii

TÓM TẮT iii

TABLE OF CONTENTS iv

LIST OF ABBREVIATIONS vi

LIST OF TABLES vii

CHAPTER 1: INTRODUCTION 8

1.1 Background 8

1.2 Rationale of the Thesis 9

1.3 Purpose of the Thesis 9

1.4 Key Research Area 10

1.5 Methodology 10

1.6 Contribution of the Thesis 10

1.7 Outline 11

CHAPTER 2: LITERATURE REVIEW 12

2.1 Definitions of Corporate Governance 12

2.1.2 What is Corporate Governance? 12

2.1.2 Objectives of Corporate Governance 12

2.1.2 Codes of Corporate Governance 13

2.2 Models of Corporate Governance 14

2.2.1 Shareholder Model 14

2.2.1 Stakeholder Model 15

2.3 Corporate Governance System 17

2.4 Corporate Governance Mechanisms 19

2.4.1 Internal Mechanisms 20

2.4.2 External Mechanisms 25

2.5 Corporate Governance in Transition Economies 28

2.6 Chapter Summary 31

CHAPTER 3: CORPORATE GOVERNANCE IN VIETNAM 32

3.1 Introduction 32

3.2 Legal framework and law enforcement 33

3.2.1 Development of a legal framework for corporate governance in Vietnam 33

3.2.2 Current corporate governance framework in Vietnam 34

3.3 Rights of Shareholders 39

3.3.1 Basic shareholder rights 39

3.3.2 Right to participate in or to be informed of decisions on key corporate changes 42

3.3.3 Rights to participate and vote in general shareholders’ meeting 43

3.3.4 Markets for corporate control 44

3.4 Equitable Treatment of Shareholders 45

3.4.1 Equal treatment to all shareholders 45

3.4.2 Minority shareholder protection 46

3.4.3 Insider trading and abusive self-dealing 48

3.4.4 Related party transactions 48

3.6.1 Information disclosure 50

3.6.2 Quality of accounting standards 52

3.6.3 Annual audit 53

3.6.4 External Audit 55

3.6.5 Channels for disseminating information 56

3.7 Board of Directors 57

3.8 Board of Supervisors 62

3.9 Remaining corporate governance issues in Vietnam 63

3.10 Chapter Summary 64

CHAPTER 4: CHANGES IN CORPORATE GOVERNANCE OF STATE OWNED ENTERPRISES AFTER EQUITIZATION 66

4.1 Introduction 66

4.2 Methodology and Data collection 67

4.3 Ownership structure after equitization 68

4.4 Board of Directors Composition 69

4.5 The Board of Supervisors 70

4.6 Manager orGeneral manager (CEO) 72

4.7 Other committees 73

4.8 Executive Compensation 73

4.9 Case Study 73

4.9.1 Vinamilk 74

4.9.2 PVFCCo 77

4.9.3 Performance and stock price comparison 80

4.10 Chapter Summary 81

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS 82

REFERENCES 85

REFERENCES

 Vietnamese

 Bao Dai Doan Ket (Sep 2010), “Luat chung khoan: Co lai rat kho” , Article

 Bao Dau tu Chung Khoan Dien tu (May 2010), “Chat luong cong bo thong tin: Nhieu doanh nghiep con doi pho”, Aticle

 Bao Sai Gon Tiep thi (September 2010), “Van con nhieu diem chua minh bach”, Article

 SAGA (2009), “Minh bach Thong tin tren thi truong chugn khoan”, Article

 Thoi bao kinh te Sai Gon (September 2010),“Dau de tim su minh bach”, Article

 English:

 Allen, F., (2005), “Corporate Governance in Emerging Economies,” Oxford Review of Economic Policy 21, 164-177

 Allen, F., and Gale D., (2000), “Corporate Governance and Competition,” in X Vives (ed.) Corporate Governance: Theoretical and Empirical Perspectives, Cambridge University Press

 Berglöf, E and Claessens S., (2004) “Corporate Governance and Enforcement.” World Bank, Policy Research Working Paper No

3409, September

 Berglöf, E and von Thadden E L (1999) “The Changing Corporate Governance Paradigm: Implications for Transition and Developing Countries”, Working Paper, June 1999

 Berle, A and Means G.C (1932) The Modern Corporation and Private Property New York, Macmillan Publishing Co

 Broadman, H G (2001a), Lessons from Corporatization and Corporate Governance Reform in Russia and China Paper presented

at the International Conference on Corporate Governance Development in Vietnam, Hanoi (October), World Bank: Washington (SSRN abstract #292599)

 Byrd, J., and K Hickman (1992), “Do Outside Directors Monitor Managers? Evidence from Tender Offer Bids.” Journal of Financial Economics 32: 195-207

 Coase, R (1937), The nature of the firm Economica, pp 386-405

 Davidson, W., Pilger, T., Szakmary, A., (1998), Golden parachutes, board and committee composition, and shareholder wealth Financial Review 33, 17–32

 Demsetz, H., and Villalonga (2002), Ownership structure and corporate performance, Working Paper Series, Available at SSRN: http://ssrn.com/abstract=266101

 Diego Cueto (2007), Ownership and Corporate Governance in Emerging market, Evidence from Latin America

 EADN Working Paper (2007), Equitization and Firm Performance, the case of Vietnam

 Estrin, S., Hanousek, J., Kocenda, E., and Svejnar, J (2008) Effects

of Privatization and Ownership in Transition Economies August

 Fama, E., (1980), „Agency problems and the theory of the firm‟, Journal of Political Economy, 88, pp 288–307

 Fama, E., Jensen, M (1983), Separation of ownership and control Journal of Law and Economics 26, 301-325

 Gerschenkron, A (1962), Economic Backwardness in Historical Perspective Cambridge, MA: Harvard Univ Press

 Gyde Louret Nouel (2006), Risky Corporate Governance in Vietnam

 Hart, O (1995), Corporate Governance: Some Theory and Implications Economic Journal 105, 678-689

 Healy, P and Palepu K (2001), Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature Journal of Accounting and Economics 31 (September): 405-440

 International Corporate Governance Meeting (2004), Why Corporate Governance Matters for Vietnam

 Jensen, M C and Meckling W H (1976), Theory of the firm: Managerial Behaviour, Agency Costs, and Ownership Structure Journal of Financial Economics, 3 (4): 305-360

 Jensen, M C and Murphy K J (1990), Performance pay and top management incentives Journal of Political Economy, 98: 225-264

 Jensen, M C., and Ruback, R (1983), “The Market for Corporate Control: The Scientific Evidence,” Journal of Financial Economics,

XI, 5–50

 Johnson, S R La Porta, F Lopez de Silanes, and A Shliefer (2000), Tunneling The American Economic Review, 90 (2): 22-27

 Kesner, I F (1988), Directors' characteristics and committee membership: An investigation of type, occupation, tenure, and gender Academy of Management Journal, 31: 66-84

 Klein, A (1998), Firm performance and board committee structure Journal of Law and Economics 41, 275-303

 La Porta, R., Lopez-de-Silanes, F., Shleifer, A and Vishny, R (1998),

“Law and Finance,” Journal of Political Economy, 106, 1113-55

 Le Minh and Walker (2008), Corporate Governance of Listed Companies in Vietnam

 Lenice Lim,Corporate Governance (2010) , A survey of Australia and

 Liu, Q (2005), Corporate Governance in China: Current Practices, Economic Effects, and Institutional Determinants, University of Hong Kong, May, 2005

 Maher, M and Andersson, T (1999), Corporate Governance: Effects

on Firm Performance and Economic Growth, OECD Working Papers

 Manne, H.G (1965), Mergers and the Market for Corporate Control Journal of Political Economy (April): 110-120

 Martin, K and J McConnell (1991), “Corporate Performance, Corporate Takeovers and Management Turnover”, Journal of Finance,

46, 671-687

 Mirrlees, J (1976), "The Optimal Structure of Incentives and Authority within and Organization." The Bell Journal of Economics 7:105-131

 Murphy, Kevin J (1985) “Corporate Performance and Managerial Remuneration: An Empirical Analysis.” Journal of Accounting and Economics 7 (April):11-42

 Nason Pettman and Navcha Lamjav (2009), Evolution of Corporate Governance in China

 Quach Manh Hao (2008), Equitization in Vietnam: Corporate Governance Practice

 Rosenstein, N Rangan, and W N Davidson III (1992), “Board Composition and Shareholder Wealth: The Case of Management Buyouts,” Financial Management, 21, 58-72

 Shleifer, A., and Vishny, R (1997), “A Survey of Corporate Governance,” Journal of Finance, LII, 737–783

 Sison, Alejo Jose G (2000), “The Cultural Dimension of Codes of Corporate Governance: A Focus on the Olivencia Report”, Journal of Business Ethics, 27, 181-192

 Tirole, J (2001), "Corporate Governance," Econometrica, Econometric Society, vol 69(1), pages 1-35, January

 Vafeas, N (1999) “Board meeting frequency and firm performance”, Journal of Financial Economics 53(1):113−142

 Vance S C (1983), Corporate leadership: boards, directors and strategy New York: McGraw Hill Book Co

 Verrecchia, R (2001), Essays on disclosure, Journal of Accounting and Economic s 32, 97-180

 World Bank (2006), Corporate Governance Country Assessment

 Yermack, D (1996), Higher market valuations of companies with a small board of directors, Journal of Financial Economics 40,185-211

 Zingales, L (2000), “In Search of New Foundations” Journal of Finance, 55(4), 1623-1653