VIETNAM NATIONAL UNIVERSITY, HANOI
SCHOOL OF BUSINESS

TRAN TRUC QUYNH

DISCLOSURE OF INFORMATION
&
THE CASE STUDY OF JOINT STOCK COMMERCIAL BANK FOR
INVESTMENT AND DEVELOPMENT

Major: Business Administration
Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS

Supervisor: PhD. Tran Doan Kim Hanoi - 2012
vi

TABLE OF CONTENT

ACKNOWLEDGEMENTS i
ABSTRACT ii
TÓM TẮT iv
TABLE OF CONTENT vi
LIST OF TABLE ix

2.1.1 Overview of BIDV 33
2.1.2 The process of formation and development 34
2.1.3 Organization Structure 36
2.2 Position of BIDV in the financial market 39
2.2.1 The leading bank in project and enterprise financing 39
2.2.2 Retail banking - Multichannel and modern distribution network 41
2.2.3 Expansion of international investment and being a reliable counterpartner of
international financial institutions 42
2.2.4 The leading bank in transparency and quality management 42
2.2.5 The first bank in implementing the policies of the Party and the Government,
and the social security tasks 43
2.3 Disclosure of information at BIDV 44
viii

2.4 Assessment on disclosure activities at BIDV 46
2.4.1 Description of the Research process 46
2.4.2 Research findings 49
2.4.3 Depth interview result 60
CHAPTER3: RECOMMENDATIONS AND ACTION PLANS TO IMPROVE
DISCLOSURE ACTIVITY AT BIDV 63
3.1 Recommendations to improve disclosure activity at BIDV 63
3.1.1 Developing Investor Relations Department 63
3.1.2 Setting up Information Policy of BIDV 65
3.1.3 Standardizing the internal disclosure process 65
3.1.4 Building database and processing false information 67
3.1.5 Utilizing the role of spokesperson 69
3.1.6 Building website for investors (IR portal) 69
CONCLUSION 76
REFERENCES 77
APPENDICES 79

1

INTRODUCTION

The disclosure of information is vitally important for evaluation of a company’s
progress by its shareholders and potential investors. Such disclosure helps
companies to attract investment and to remain trustworthy. Insufficient or
inaccurate information about a company can hinder the successful development of
its business.
Shareholders and investors require regular access to reliable information, in
particular to control the management bodies of the company and make informed
decisions regarding the evaluation of its activities. On the other hand, it is very
important to make sure that the information disclosure requirements do not act
against the company's interests and that no confidential information is disclosed,
since it may harm the company. However, all restrictions related to disclosure must
be subject to strict regulations.
As a bank which has just completed IPO and become a public firm, BIDV needs to
follow the law of corporate disclosure. However, for the last few months, disclosure
at BIDV has still been random and inconsistent when releasing information to
investors and the press. Therefore; BIDV needs to have a special department to
fully understand the law of disclosure as well as to build a professional and
effective disclosure process in order to maximize the benefits for BIDV’s
shareholders.
Motivated by the practical needs mentioned above, the research “Disclosure of
Information & The case study of Joint stock commercial bank for investment
and development” bears a practical meaning to the joint stock corporates in
Vietnam in general and to BIDV in particular.
1. Research methodology
Both qualitative and quantitative approaches are used to answer the research
questions.

methodology to develop knowledge (e.g. cause and effect, test a hypothesis
or a theory). Quantitative research involves analysis of numerical data. For
this research, a quantitative survey will be conducted. Followings are some
features of a quantitative research:
- The aim is to classify features, count them, and construct statistical
models in an attempt to explain what is observed.
- Researcher knows clearly in advance what he/she is looking for.
- Recommended during latter phases of research projects.
- All aspects of the study are carefully designed before data is collected.
- Researcher uses tools, such as questionnaires or equipment to collect
numerical data.
- Data is in the form of numbers and statistics.
- Objective seeks precise measurement & analysis of target concepts,
e.g., uses surveys, questionnaires etc.
- Quantitative data is more efficient, able to test hypotheses, but may
miss contextual detail.
- Researcher tends to remain objectively separated from the subject matter.
In this study, the research questions will be used as the guidelines for the research
processes.
1.1 Research purpose
The purpose of this research is to investigate the disclosure activity at BIDV.
Therefore the main research question is:

How is Investor Relations and disclosure of information activities at BIDV
4

To clarify the research question, the research will analyse the following two sub-
research questions:
1. How do investors assess the disclosure of information at BIDV?
2. Which information would investors like to know?

potential investors.
3. Delimitation
Firstly, the research focuses mainly on the disclosure activity in particular and
Investor Relations in general.
Secondly, because of time and relationship limitation, the research is limited in the
sense that small scale of sample in interview and questioning. Geographic distance
is one of the reasons that email survey was chosen.
Thirdly, BIDV has become a large-scale public company and been going to listed
company. Therefore, the research is limited for the public company.
Finally, to the best of my knowledge, this is the first study of disclosure of
information. Consequently, the research limited by the lack of available academic
research on the subjects related to the research questions.
4. Disseminations
The result of research will useful for not only disclosure activity of BIDV in
particular but also for other companies which are going to be public and listed on
stock market.
The finding in theory will help public and listed company to understand the
practices and legal requirement of disclosure of information. Therefore, he research
finds may serve as a source of references for concerned agencies to improve their
understanding about information disclosure as well as the quality of disclosure
activities at their own banks or listed companies.
5. Follow-up
6

Further study will be taken on improvement of implementation Investor Relations
activity in general and disclosure of information in particular when BIDV become a
listed company.

7


ACTION PLAN TO IMPROVE
DISCLOSURE ACTIVITY AT BIDV

3.1 Recommendations
3.2 Action plan

CONCLUSION

8

CHAPTER 1: LITERATURE REVIEW

1.1 Definition Investor Relations
1.1.1 Definition
In shareholding companies, the practice of IR is widely applied as an effective
strategy for companies to build tight relationships with their stakeholders in general
and investor communities in particular.
According Louis M.T Jr., President and CEO of National Investor Relations
Institute (NIRI)
1
“Investor Relations (IR) is a strategic management responsibility
that integrates finance, communication, marketing and securities law compliance to
enable the most effective two way communication between a company, the
financial community, and other constituencies, which ultimately contributes to a
company’s securities achieving fair valuation”.

In addition, Marston and Straker
2
defined IR as the communication of company
information to investors, financial communities, analysts. Rao and Sivakumar

Rao, H. and Sivakumat,K.(2009), Institutional sources of boundary spanning structures: the establishment
of investor relations department in the Fortune 500 industrials, Organization Science, p.27-32
9

1.1.2 Function of Investor Relations
Considering the IR performance, some people may think that IR is a form of
marketing activity. However, the word “marketing” is confusing word in this case.
According to Anne Guimard
4
, the main role of IR is to persuade investors that a
dollar invested in your company will appreciate faster than a dollar invested in any
other company. This contrasts with normal marketing activities, in which customers
are simply buyers, the customers in IR activities include sellers, buyers, brokers,
analysts or any intermediary agents involved in the stock transaction process. IR has
many following function:
Disclosure
There are many different types of investor with many different objectives. Some
want growth and look for stocks with high returns and earnings momentum. Other
seek value and purchase stock they feel are undervalued and underfollowed by
Stock market. Another type of investor wants income, like stocks with a dividend.
Regardless of the differences, most investors take the information they are given
and run it through quantitative models. Then they compare the results to other
companies in the same industry and make an investment decision based on these
relative quantitative indicators. This is basic information easily culled from a
company’s financials, which must be disclosed on its income statements, cash flow
statements, and balance sheets. Anyone can get these and do their modelling.
No public company operates in a vacuum. In fact, many people, including
regulators and competitors, generate opinions that can affect a company’s position
in the capital markets. Every decision a company makes, whether financial,
strategic, or operational, ripples into the capital markets and affects the stock price,

The responsibilities for disclosing information can be listed as below:
 Disclosing information in accordance with regulations.
 Managing web page for Investors.
 Composing reports, presentations, notifications and media messages concerning
investor relations.
 Participating in building and designing annual reports and news reports for
investors.
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Maximize equity value
There are the intangibles, which is where IR needs to be at the top of its game. The
intangibles are the nuances of value, the managing of expectations and perception,
and the ability to define, deliver, and create a dialogue about a company’s financial
performance and position in its industry. In fact, intangibles are an important
component of maximizing value. Anywhere from 20 to 40 percent of a company’s
valuation is linked directly to these items. That’s a big piece of valuation pie, and
the job of IR is to help management maximize it and investors understand it.
Providing the necessary disclosures and information is one thing. Knowing what
stock market expects from a company and its management team is something else
entirely. The best IR professional are inside the brains of their investors, and think
like analysts and portfolio managers. By understanding valuation they can approach
analysts and money managers as peers and work hard to build trust.IR can direct
improve the 20 to 40 percent of a company’s valuation linked to factors outside of
financial performance and bolster market capitalizations while increasing exposure
and obtaining valuable third party validation. There is a science to valuation, but
there is also an art.
Share or stocks are special products representing the company’s value. When the
investor buys shares they expect the future value of the share to increase. Financial
reports and other disclosed information are important sources to evaluate share
price. However, any disclosures are based on mainly on historical information.

Working with the General director to
build, promote and develop firm’s brand
and managing public relations
Assisting the General director in
disclosing information before, during
and after domestic and international
listed process
Providing directions, keeping track PR
activities on a regular basis of member
Driving synergy between related
functions at the head office and at
13

units.
member units to build database that is
specially used for disclosing information
to state agencies, investors, the media
and the financial community. Main
charge of building and maintaining
relations with state agencies, investors,
the media and the finance community.
Directly running functional activities to
build, promote and develop the brand of
BIDV
Directly in charge of managing
disclosure and organizing disclosure
events to release information to the
public, including state agencies,
investors, the media and the finance
community.

order to ensure the fairness of the stock prices and protect investors.
The entities that involve in the securities market include:
 The bond issuers
 Listed organizations
 Stock companies
 Fund management companies
 Stock investment companies
 State Stock exchange
 Stock exchange centres
There are two main methods of disclosure: direct disclosure and indirect disclosure.
Direct disclosure means that responsible organizations have the rights to disclose
information via public media channels and are obliged to report to administering
15

agencies or market operation agencies such as state securities commission, state
stock exchange or stock exchange centers.
Indirect disclosure means that organizations before disclosing information have to
transfer the information to administering agencies and market operation agencies so
that those entities can process the information before releasing to public via
communication channels of those agencies themselves or other public
communication channels.
1.2.2 Benefits of effective disclosure
To investors
Investors are one the most fundamental parts of the financial system. They are the
ones to both provide capital, the most crucial factor in the market and establish the
diverse relations in the market; for example relations between investors (law
makers) or between investor (listed companies and public companies). This had
contributed to making the market more complicated and diverse. They account for
the big part in the market together with other parts such as market maker, financial
institution and also the ones who take risks in allocating capita, implementing

Information transparency and disclosure plays a part in promoting long term
benefits for corporates. Mentioned here are the two most fundamental benefits:
Reducing cost of capital and enhancing company value. Those factors are
correlative.
Lowering cost of capital
Theoretically, poor liquidity and the gap between “buy” and “sell” brings
transaction fee burden to investors. In addition, discriminative treatment among
investors can make them turn their backs, resulting in the increase of cost of capital.
By actively promoting corporate business to the investors community, disclosure
can also help to reducing the cost of capital. Corporate can spend less money raising
capital if they their stocks become more well-known among investors. In another
sense, in case the market value of the stocks is lower than the intrinsic value,
17

disclosing information transparently will partly provide better understanding of
business to investors, by which will bridge the gap between market value and
intrinsic value and reduce the cost of capital
Enhancing corporate value
David Well
5
points out managers will possibly forgo many profitable investment
opportunities if they issue more stocks to raise capital without paying attention to
the issue of information asymmetry between the firm’s well-informed managers and
its less-informed investors.
The research of Yin R.R
6
indicates that information disclosure can impact the firm’s
value by influencing decisions of managers and change the cash flow allocation in
the future. Many researches based on theoretical approach suggested that companies
with higher level of transparency and better management can enhance their value

 Firstly, when there is more information available on the market, it is more
difficult and costly to an investor who wants to have more information advantage
then the others. Therefore, there are very few investors who can afford this, which
means there is less chance of transaction with investors who have strong
understanding of the market.
 Secondly, more quality disclosure would reduce the changes within the firms,
which will reduce the information advantage that many investors might have.
Both the effects, together, will weaken the trend of increasing self-protection of
investors who have little information and by that, improving the market liquidity.
Once the market liquidity is enhanced and the market itself becomes more
appealing to investors, both the sides who publish and use information will enjoy
certain advantages. The investors, who utilize information, can proactively allocate
their capital sources while the list companies, who disclose information, have higher
chance to attract more sustainable source of investment capital with lower cost of
capital but higher effectiveness.
Apparently, when firm’s operation is transparently released, the valuation of the
firm is of higher accuracy. This means the capital is allocated to the right place and
thereby, improving efficiency of the market. However, we also need to accept that
19

information disclosure is effective only when investors have sufficient and proper
understanding and analyzing ability to utilize the information.
1.3 Principle of disclosure
While many listed organizations are aware of the importance of information
disclosure, they cannot disclose information randomly in term of format, content or
timing. Disclosing information appropriate has become an important custom and
ethic in business; as a result, there are certain criteria and principles that need to be
followed.
Listed and public company need to comply with the provisions in Circular
52/2012/TT-BC issued on 5