Mối quan hệ giữa đặc điểm hội đồng quản trị và thông tin bất cân xứng của các công ty niêm yết trên sở giao dịch chứng khoán TP HCM tt tiếng anh

Many studies focused on the relationship between the characteristics of board and asymmetric information in many different aspects; such as board size, non-executive directors, diversity

BANKING UNIVERSITY HO CHI MINH CITY

PHAN BUI GIA THUY

RELATIONSHIP BETWEEN BOARD'S CHARACTERISTICS AND

ASYMMETRIC INFORMATION OF LISTED FIRMS ON

HO CHI MINH STOCK EXCHANGE

DR NGUYEN TRAN PHUC

HO CHI MINH CITY, 2020

CHAPTER 1

INTRODUCTION 1

1.1 Research problem 1

1.2 Research objectives 3

1.3 Research questions 4

1.4 Object and scope of this study 4

1.5 Research methodology 4

1.6 The significance of study 5

1.7 The structure of study 5

CHAPTER 2 LITERATURE REVIEW 6

2.1 Asymmetric information 6

2.2 Asymmetric information in the stock market 6

2.2.1 Definition 6

2.2.2 Basis for measurement 6

2.2.3 Measurement method 6

2.3 Review of studies 7

2.3.1 Research on asymmetric information measurement models 7

2.3.2 Research on relationship between board's characteristics and asymmetric information 8

2.3.3 Discussion of research gap 11

CHAPTER 3 RESEARCH METHODOLOGY 13

3.1 Asymmetric information measurement models 13

3.1.1 Glosten and Harris (1988) model 13

3.1.2 George, Kaul and Nimalendran (1991) trade-indicator model 13

3.1.3 George, Kaul and Nimalendran (1991) serial covariance model 14

3.1.4 Kim and Ogden (1996) model 14

3.3 Research framework 16

3.4 Research hypothesis 17

3.5 Research method 18

3.5.1 Data collection 18

3.5.2 Definition and measure of variables 19

3.5.3 Regression analysis 19

CHAPTER 4 EMPIRICAL RESULTS AND DISCUSSION 22

4.1 Measuring asymmetric information 22

4.1.1 Degree of asymmetric information 22

4.1.2 Degree of asymmetric information for individual stock 25

4.2 Board's characteristics and asymmetric information 29

CHAPTER 5 CONCLUSIONS AND POLICY IMPLICATIONS 35

5.1 Highlights of study 35

5.1.1 Asymmetric information measurement 35

5.1.2 Board's characteristics and asymmetric information 35

5.2 Policy implications 36

5.2.1 Policymakers 36

5.2.2 Listed firms 36

5.2.3 Investors 36

5.3 Limitations and further research 36

5.3.1 Limitations 36

5.3.2 Further research 37

5.4 Conclusion 38

LIST OF AUTHOR'S PUBLICATIONS 39

CHAPTER 1 INTRODUCTION

1.1 Research problem

1.1.1 Academic context

Asymmetric information and measuring it on the stock market is the field that attracts a lot

of attention from researchers because of the importance and topicality of this research field Firstly, the measure of asymmetric information provides the basis for assessing the information environment of the stock market in a specific nation (Affleck-Graves et al., 1994; Chakravarty et al., 2005; Huang, 2004; Lai et al., 2014)

Secondly, the measure of asymmetric information is useful in assessing the effectiveness

of policies issued by market regulators (Berkman and Lee, 2002; Chiyachantana et al., 2004; Frijns et al., 2008)

Thirdly, this depends on the method of choice used, which is strongly influenced by the characteristics of the trading market or the context of a specific country (Van Ness et al., 2001; De Winne and Majois, 2003)

Finally, the measure of asymmetric information has still updated and added to this day For example, Johnson and So (2018) have introduced a new approach, and this approach is thought to be superior to the traditional one

On the other hand, asymmetric information is the main cause of the agency problem (Jensen and Meckling, 1976) and the solution to this problem requires a corporate governance mechanism under international practice, namely that board An effective board can reduce the agency cost, increase shareholder value, disclose information transparency, and limit risk of information (Kanagaretnam et al., 2007; Chen et al., 2007; Rutherford and Buchholtz, 2007) According to Zahra and Pearce (1989), Nicholson and Kiel (2004), Hilb (2012), one of the important factors contributing to the effective function of a board is the board's characteristics

Many studies focused on the relationship between the characteristics of board and asymmetric information in many different aspects; such as board size, non-executive directors, diversity of women, educational qualification of board, duality, and ownership However, the results of the impact of the board's characteristics on asymmetric information

are still controversial and inconsistent due to differences in a specific country, research period, and research method

In addition to the inconsistent research results, the studies that mention the diversity of the board, including women on board and the educational qualifications of directors that are likely to impact asymmetric information is still limited

Besides, not many studies have examined the effects of independent performance and the knowledge level of board members on asymmetric information under a different type of firm Specifically, the number of studies that compare the effectiveness of independent directors and the educational qualifications of board members in restricting asymmetric information in state-owned firms compared with those in non-state-owned firms is limited Moreover, many researchers are less interested in the nonlinear relationship between directorial ownership and asymmetric information

1.1.2 Practical context

The world has witnessed many scandals involving information asymmetry Typically, the fraudulent actions of Enron's company (US) in 2001 through financial reporting fraud led to the company filing bankruptcy, pushing more than seven thousand employees into unemployment Shareholders who invested in Enron's share investment deal suffered losses

of $74 billion, resulting in a total loss Recently, the accounting scandal at Toshiba Company (Japan) in 2015 caused a series of losses First, the scandal caused trust among investors and customers, overshadowing a brand with 140 years of corporate history Secondly, Toshiba's share value declined by 17% despite the Nikkei 225 index increasing

by 7.6% and a series of senior leaders in the Board of Directors resigning (Hass et al., 2018)

Vietnam, a country whose stock market is ranked by international organizations as a frontier market (SSC, 2018; HOSE, 2019), therefore the losses in the stock market due to rumors, frauds of financial statements, and non-transparency in disclosing information are very serious

Although the authorities are always eager to improve the publicity, transparency of information and compliance with corporate governance of listed firms by issuing Decree 71/2017/ND-CP replaces Circular 121/2012/TT-BTC providing guidance on corporate governance applicable to public companies, and increase the effectiveness of inspection, supervision, and enforcement through the issuance of Decree 145/2016/ ND-CP amending

and supplementing a number of articles of Decree 108/2013/ND-CP stipulates the sanctioning of administrative violations in the field of securities, but mistakes in the field of securities Stock always complicated developments According to UBCKNN (2016, 2017, and 2018), the cases of administrative sanctions have increased steadily in recent years For example, in 2016, there were 133 administrative violations In 2017, the number increased

by 162% or 217 cases, and in 2018 the number of violations was 397 cases, up 14%

From the facts, we can identify the common points of the securities scandals: (i) before the stock market price hit the floor or plunged into panic, there were sharp increases in prices, and (ii) the stock market price dropped significantly in the long run before the authorities issued a warning or had more effective control measures As long as there are some limitations in regulatory oversight, delays in warnings and sanctions, and ineffective implementation of the Board's role and functions, Vietnam's information environment is still poor transparency, hiding the severe degree of asymmetric information among investors Therefore, it is imperative that a preliminary assessment and then a proposal for mechanisms to minimize the information risk of listed firms on Vietnam's stock market be urgent

Based on the disagreements about the results of the research, the research gaps, the urgency and current events from the practice, and the quantitative limitations of the relevant studies, measuring asymmetric information and estimating the relationship between the board's characteristics and asymmetric information of listed firms on the Ho Chi Minh Stock Exchange (HOSE) need to be researched and implemented

1.2 Research objectives

The overall objective of the thesis is to focus on studying the impact of the board's characteristics on asymmetric information of listed firms in Vietnam, based on which the thesis recommends several policies to limit asymmetric information The thesis aims to achieve specific objectives as follows:

- Measuring the level of asymmetric information of listed firms on HOSE

- Identifying the suitable asymmetric information measurement model in the context of Vietnam

- Identifying and measuring the factors related to the board's characteristics likely to impact on asymmetric information

- Recommending many policies to decline the degree of asymmetric information

- Is there a nonlinear relationship between the shareholding ratio of board members and asymmetric information?

1.4 Object and scope of this study

The thesis mainly focuses on the factors related to the board's characteristics likely to affect asymmetric information of listed firms on HOSE from 2009 to 2015

To answer the second research question, the study checks the similarity of models, estimates the correlation between variables including the levels of asymmetric information using different models and the determinants, such as growth opportunity, liquidity trading, and debt ratio, and tests the change in the level of asymmetric information before and after the period of adjusting price limit range

To answer the third research question, the thesis uses the econometric method to perform the regression equation of determinants of the board's characteristics affecting asymmetric information

To answer the fourth research question, the study performs the testing of the interaction effects between the type of firm and independent directors and the education level of board members

To answer the final research question, the thesis uses the threshold regression model and the piecewise linear regression

The research results will be the basis for the implication of a number of policies to limit the degree of asymmetric information of listed firms in Vietnam

1.6 The significance of study

Several main contributions of this thesis are as follows:

Firstly, the study proposes an appropriate asymmetric information estimation model that can be used to measure asymmetric information in the context of Vietnam

Secondly, the study provides evidence that expanding the price limit range from 5% to 7% is likely to increase the level of asymmetric information

Finally, the study also adds some outstanding empirical pieces of evidence on the relationship between the board's characteristics and asymmetric information Specifically, the effects of independent directors and the educational qualifications of board members on asymmetric information depend on the moderating of the type of firm Besides, there is a threshold value of 1.74% of the shareholding ratio of the board members at which this ratio tends to impact on asymmetric information in different forms

1.7 The structure of study

The structure of the study is organized in five chapters Accordingly, the chapters have the following layout:

Chapter 1: Introduction

Chapter 2: Literature review

Chapter 3: Research methodology

Chapter 4: Empirical results and discussion

Chapter 5: Conclusions and policy implications

CHAPTER 2 LITERATURE REVIEW

2.1 Asymmetric information

In general, asymmetric information exists when the amount of information regarding a potential transaction varies from one group of investors to another (Watts and Zimmerman, 1986)

2.2 Asymmetric information in the stock market

2.2.1 Definition

Asymmetric information of listed firms on the stock market reflects an object or group of objects that own superior firm-specific information related to future public disclosures not available to uninformed (Chae, 2005)

2.2.2 Basis for measurement

The basis for measuring asymmetric information is based on trading gains, expected revenues and losses, and order flow signals

2.2.3 Measurement method

2.2.3.1 Benchmark price method

Asymmetric information is measure by taking a difference between the transaction price and the benchmark price of a traded stock (Venkatesh and Chiang, 1986; Lee, 1993; Huang and Stoll, 1996) Benchmark price is the price at which buyers or sellers easily accept transactions At relative levels, the midpoint of the bid-ask spread can represent the benchmark price The larger the deviation between the transaction price and the midpoint equals the higher asymmetric information

The advantage of this method is convenient and quick estimating of information problem for individual stock; therefore, Chung et al (2010), Armstrong et al (2014) prefer this method However, the disadvantage of this is that it does not measure the specific degree of asymmetric information, takes a long time to estimate information risk of the overall market, and exaggerates the level of asymmetric information

2.2.3.2 Econometric method

The econometric method separates the adverse selection component from the bid-ask spread

to measure the level of asymmetric information Some studies that apply this method to

measure asymmetric information include Glosten and Harris (1988) (GH model); Stoll (1989) (Stoll model); George, Kaul and Nimalendran (1991) (GKN model); Lin, Sanger and Booth (1995) (LSB model); Kim and Ogden (1996) (KO model); Madhavan, Richardson and Roomans (1997) (MRR model) This method is more reliable, has fewer errors, and is easier to estimate asymmetric information for the overall market and individual stock However, the significant downside is that these are arguable when using econometric models together

2.3 Review of studies

2.3.1 Research on asymmetric information measurement models

Table 2.2 below summarizes empirical studies applying models using econometric method

to measure asymmetric information

Table 2.1 The studies using econometric method to measure asymmetric information

29.4%-MRR Tokyo

(05/01/2000 - 31/3/2000)

57.1%

(02/1998 - 04/1998)

53.0%

NASDAQ (02/1998 - 04/1998)

Source: The studies are mentioned in the table

2.3.2 Research on relationship between board's characteristics and asymmetric information

Jensen and Meckling (1976) point out, asymmetric information is the main cause of the agency problem and the solution to this problem requires a corporate governance mechanism under international practice, namely that board According to Kanagaretnam et

al (2007), Chen et al (2007), Rutherford and Buchholtz (2007), an effective board can reduce the agency cost, increase shareholder value, disclose information transparency, and limit risk of information One of the important factors contributing to the effective function

of a board is the board's characteristics (Zahra and Pearce, 1989; Nicholson and Kiel, 2004; Hilb, 2012) The board's characteristics, often mentioned in corporate finance research and corporate governance topics and likely to affect asymmetric information, include board size, independent directors, female directors, education level of board members, duality, and directorial ownership

 Board size

According to the resource dependence theory, a company with a large board size has many advantages compared to a company with a small board size Specifically, with many board members, executives will receive more information and better advice and direction (Pfeffer and Salancik, 1978; Dalton et al., 1999; Hillman et al., 2009) Moreover, several studies have also shown that the company with many directors is capable of limiting asymmetric information between outside shareholders and managers (Cai et al., 2006; Goh et al., 2016)

On the contrary, according to the agency theory, too many board members will create many disadvantages for the company, such as consensus disadvantage in making decisions, exchanging information, and free-rider problems According to Lipton and Lorsch (1992), Jensen (1993), and Beasley (1996), a firm with small board size will perform the corporate governance functions more effectively and are responsible for higher shareholders

 Independent directors

Independent board members represent the interest of shareholders better and can supervise managers more effectively than inside directors (Fama and Jensen, 1983; Weisbach, 1988) Moreover, in the firms with many independent members, the level of information disclosure

to the public will be more publicized (Chen and Jaggi, 2000) and thus limit asymmetric information between informed and uninformed investors (Barakat et al., 2014; Armstrong et al., 2014; Elbadry et al., 2015)

 Female directors

Several views do not support the presence of women in board, because female board members have an ineffective influence on the transparency and quality of financial information of businesses and activities of corporate governance In particular, diversity of women in board can lead to too many choices, which hinder and discriminate management

decisions (Alexander et al., 1995; Blau, 1977); increase conflict between management levels (Richard et al., 2004); and reduce work coherence (Jackson et al., 2003)

However, agency theory and information economics, and many empirical studies have acknowledged the presence of women on the board Performances of female directors significantly improve the effectiveness of the company's shareholder relations (Joy, 2008), increase the level of information disclosure in both quality and quantity (Nalikka, 2009; Gulzar and Wang, 2011; Qi and Tian, 2012), and restrict information risk between managers and outside shareholders (Abad et al., 2017) In addition, the highlight of women is not overconfidence (Lundeberg et al., 1994) They apply ethical standards to decision making (Pan and Sparks, 2012), and take into consideration the level of risk more effectively than men (Powell and Ansic, 1997; Byrnes et al., 1999)

 Education level of board members

Although Haniffa and Cooke (2002), Cai et al (2006) have not found a relationship between the education level of the board members and asymmetric information, highly educated, well-trained, and in-depth directors tend to disclose more information outside (Ahmed and Nicholls, 1994), contributing to the timeliness and reliability of financial reporting information (Yunos, 2012); and therefore, limiting the degree of asymmetric information (Chemmanur et al., 2009)

Moreover, the education level of board members contributes to increasing the effectiveness of the board's activities (Jalbert et al., 2002) Chemmanur et al (2009), Lewis

et al (2014) have shown that board members with a higher level of education are more responsible for information disclosure On the other hand, Elbadry et al (2015) have shown that directors with a deep understanding of finance have a positive relation to stock liquidity

According to the agency theory and good corporate governance practices, the board structure should separate duality to maintain and increase the ability of independent monitoring of the board, declining asymmetric information (Li et al., 2008)

 Directorial ownership

There are two contradictory views on the relationship between shareholding of board members and asymmetric information According to the alignment view, managerial ownership could limit to asymmetric information (Becker-Blease and Irani, 2008) On the other hand, according to the entrenchment view, increasing the shareholding of board members tends to raise the private information (Elbadry et al., 2015) Based on the agency theory, aligning the interests between shareholders and board members through managerial ownership will help the board to operate more effectively in solving agency problems (Jensen and Meckling, 1976) Moreover, shareholding of board members, considered an incentive mechanism, will align and guide members to pursue the common interests of shareholders, and reduce the information costs of enterprises more effectively (Becker-Blease and Irani, 2008; Barakat et al., 2014)

Besides the linear relationship between managerial ownership and adverse selection costs, there is a non-monotonic relationship (Han et al., 2014; Abad et al., 2018) The reason

is that the ownership rate is low, the rights or incentives are not significant enough compared to the responsibilities that board members have to take, leading to the ineffective supervision of board (Gedajlovic and Shapiro, 1998) Moreover, Han et al (2014) showed that the proportion of shareholding of board members in the range of 5% to 25% has a significant relation to asymmetric information However, at a different rate, the relationship between the shareholding of board members and asymmetric information is not found

2.3.3 Discussion of research gap

Reviewing the relevant studies, the dissertation finds some research gaps in the measure of asymmetric information, and the relationship between the board's characteristics and asymmetric information

Firstly, the authors have not yet agreed on the method of measuring asymmetric information, which is the use of a benchmark price method or econometric model

Secondly, the results of the impact of the board's characteristics on asymmetric information are still controversial and inconsistent due to differences in a specific country, research period, and research method

Thirdly, in addition to the inconsistent research results, the studies that mention the diversity of the board, including women on board and the educational qualifications of directors that are likely to impact asymmetric information is still limited More specifically, the number of studies that compare the effectiveness of independent directors and the educational qualifications of board members in restricting asymmetric information in state-owned firms compared with those in non-state-owned firms is limited

Finally, many researchers are less interested in the nonlinear relationship between directorial ownership and asymmetric information

CHAPTER 3 RESEARCH METHODOLOGY

3.1 Asymmetric information measurement models

Vietnam stock market is a developing market, so there are limitations when accessing data, such as difficult to collect daily trading data with a period of continuous and large enough, and stock prices are limited by the price limit range Therefore, we apply Glosten and Harris (1988) model (GH model), George, Kaul and Nimalendran (1991) trade-indicator model (GKN trade-indicator model), George, Kaul and Nimalendran (1991) serial covariance model (GKN serial covariance model), and Kim and Ogden (1996) model (KO model) to measure degree of asymmetric information of listed firms on Vietnam stock market

3.1.1 Glosten and Harris (1988) model

The below regression equation denotes the GH model:

∆P t = c0∆Q t + c1∆(Q t V t ) + z0Q t + z1Q t V t + ε t (1)

We regress the equation (1) to obtain the c0, c1, z0 and z1 regression coefficient Let C ̅, Z̅ and V̅ are the order processing and inventory holding component, the adverse selection component, and the number of shares traded respectively The average adverse selection

component of the stocks according to GH model, ASC GH is estimated according to the formula below:

In the equation (1), ∆P t is the change in the closing price at the end of the day; Q t is a

trading indicator variable determined by Lee and Ready (1991), Q t = +1 if the closing price

is higher than the midpoint; otherwise, Q t = –1; V t is the number of shares traded at the end

of the day

3.1.2 George, Kaul and Nimalendran (1991) trade-indicator model

The below regression equation denotes the GKN trade-indicator model:

2RD TM,it = a0 + a 1 (S qi )[Q it – Q it–1 ] + ε it (3)

Where: RD TM,it = ∆P it – ∆M it is the difference between the change in the closing price at

the end of the day (∆P it) and the change in the mean of the bid price and ask price or change

in the midpoint (∆M it ); S qi is the difference between ceiling price and floor price; Q it is a

trading indicator variable determined by Lee and Ready (1991), Q it = +1 if the closing price

is higher than the midpoint; otherwise, Q it = –1; a1 = π is the order processing cost

component Therefore, the average adverse selection component of the stocks is calculated

,

2 1

it t

3.1.3 George, Kaul and Nimalendran (1991) serial covariance model

The below regression equation denotes the GKN serial covariance model:

Where: S i GKN 2 Cov RD( TM it, ,RD TM it, 1) is the spread in the GKN serial covariance

model; with RD TM,it = ∆P it – ∆M it is the difference between the change in a closing price at

the end of a trading day (∆P it ) and the change in the midpoint (∆M it ); S qi is bid ask spread;

b1 is the proportion of the order processing component in spread; therefore, the average adverse selection component of the stocks for the sample,

2

GKN

ASC is calculated as 1 – b1

Next, Jones et al (1994), Kim and Ogden (1996) proposed a convenient formula for

estimating asymptotic average adverse selection for each stock i in the GKN serial

covariance model; accordingly,

2 ,

i GKN

ASC is estimated by the following formula:

2

, , 1 ,

ASC

S T

3.1.4 Kim and Ogden (1996) model

The below regression equation denotes the KO model:

Where S i KO 2 Cov RD( TM it, ,RD TM it, 1) is the spread in the KO model, with RD TM,it =

∆P it – ∆M it is the difference between the change in transaction price (∆P it) and the change in

the midpoint (∆M it ); S̅qi 2

1

1 T qit t

S

T  is the mean of the sum of the squared spreads, β1 is the regression coefficient as a proxy for the order processing cost component Therefore, the

average adverse selection component of the stocks, ASC KO is calculated as 1 – β1

Next, Kim and Ogden (1996) proposed a convenient formula for estimating asymptotic

average adverse selection for each stock in the KO model Accordingly, ASC i,KO is estimated

by the following formula:

, , 1 ,

2 1

ASC

S T

ASC for sample

T it t

1

1

TM it TM it T

qit t

S T

1

1

TM it TM it T

qit t

S T

3.2 Adoption of asymmetric information measurement model

Firstly, the measurement model that satisfies conditions that there are few excluded observations, and the deviation between asymmetric information for individual stock and the sample is low is the basis for suggesting the appropriate model

Secondly, the research examines the similarity between models by estimating the correlation coefficients between the levels of asymmetric information applied the different models for each stock according to Van Ness et al (2001), De Winne and Majois (2003), Lamoureux and Wang (2015) Then, the study estimates the correlation between variables, including the levels of asymmetric information using different models and the determinants, such as growth opportunity, liquidity trading, and debt ratio for the purpose of testing which model will have an estimate of asymmetric information in accordance with economic theory and related empirical studies The study expects that asymmetric information will be negatively correlated with liquidity trading (Acker et al., 2002; Draper and Paudyal, 2008) and debt ratio (Ross, 1977; Jensen, 1986; Degryse and Jong, 2006), and positively correlated with growth opportunity (Krishnaswami et al., 1999; Hegde and McDermott, 2004; Fosu et al., 2016)

Finally, the study tests the change in the level of asymmetric information before and after the period of adjusting price limit range In Vietnam, the price limit range was widen from 5% to 7% on January 15, 2013 according to Regulation 01/2013/QD-SGDHCM of HOSE; therefore, according to Anshuman and Subrahmanyam (1999), Berkman and Lee (2002), the study expects that asymmetric information will increase after the price limit range is expanded

3.3 Research framework

The quantitative studies of Cai et al (2006), Armstrong et al (2014), Goh et al (2016), Abad et al (2017) illustrate that, the board's characteristics are likely to impact on asymmetric information In addition, the impact of non-executive directors and education level of board members on asymmetric information could depend on type of firms with state-owned firms, especially in the context of a developing market (Barberis et al., 1996; Buck et al., 2008; Wang, 2012; Wang et al., 2016)

Based on the theoretical analysis framework and related empirical studies, the empirical research framework on the relationship between the board's characteristics and asymmetric information is built as Figure 3.1 below

Source: Cai et al (2006), Armstrong et al (2014), Goh et al (2016), Abad et al (2017); Barberis et al (1996); Buck et

al (2008); Wang (2012); Wang et al (2016)

Figure 3.1 Empirical research framework

Figure 3.1 denotes a impact of the board's characteristics, including number of board members, female directors, educational qualification of directors, duality, personal ownership of directors, and outside directors on asymmetric information Besides, the impact of outside directors and the educational qualification of board members on asymmetric information is likely to depend on the type of firms, namely state-owned firms Control variables, including factors related to characteristics of market, such as liquidity trading, stock price volatility, growth opportunity, period of adjusting price limit range, and factors related to characteristics of firm, such as debt ratio, firm size, and effect of industry sectors are also considered

3.4 Research hypothesis

Based on quantitative research, related theories, empirical research framework and the context of Vietnam stock market, the hypotheses on the relationship between the board's characteristics and asymmetric information are constructed as follows:

H 1 : There is a positive relationship between the number of board members and

- Inderpendent and executive board members

non Educational qualification

of board members

- Type of firm owned and non-state firms)

H 2b : There is a difference in the impact of the independent members on asymmetric

information between the state-owned and non-state-owned firms

H 3 : There is a negative relationship between female directors and asymmetric

information

H 4a : There is a negative relationship between the educational qualification of board

members and asymmetric information

H 4b : There is a difference in the impact of the educational qualification of board

members on asymmetric information between the state-owned and non-state-owned firms

H 5 : There is a positive relationship between duality and asymmetric information

H 6a : There is a negative relationship between the shareholding ratio of board members

and asymmetric information

H 6b : There is non-linear relationship between the shareholding ratio of board members

and asymmetric information

3.5 Research method

This study uses quantitative method to estimate the relationship between the board's characteristics and asymmetric information of listed firms on Vietnam stock market The following is a description of how to conduct the study, including data collection, measure of research variables, and method of data analysis

3.5.1 Data collection

We collect data of listed firms on the Ho Chi Minh Stock Exchange (HOSE) from 2009 to

2015 The data of transaction price and order statistics of listed firms on HOSE is collected

at the time of Quarter 1, from January 1 to March 31 to measure asymmetric information and market-related factors that include liquidity trading, stock price volatility, and growth opportunity Data related to board's characteristics, debt ratio, and size of firm is collected at the time firms disclose at the end of the year Finally, listed firms whose financial year does not coincide at the end of the year will be excluded in the sample

The research sample does not include listed firms with a fiscal year that do not coincide

at the end of the year; firms subject to special warning, control, compulsory cancellation of listing or voluntary delisting; financial institutions such as banks, securities companies, insurance companies, and investment funds; and firms that do not disclose information