Academic journal article Academy of Accounting and Financial Studies Journal

Mandatory Social and Environmental Disclosure of Listed Companies in Vietnam

Academic journal article Academy of Accounting and Financial Studies Journal

Mandatory Social and Environmental Disclosure of Listed Companies in Vietnam

Article excerpt

INTRODUCTION

Information disclosed by listed companies on the stock market comprises mandatory disclosure and voluntary disclosure. While the former is the minimum information which promulgated regulation requires from a reporting entity (Owusu-Ansah, 1998; Wallace & Naser, 1995), the latter refers to the decisions of revealing more information than required, and the motivation includes managing corporate image, maintaining public relation and reducing litigation risk (Pham & Do, 2015; Li & Peng, 2011).

Since the first study on the information disclosure began in 1961 (Cert, 1961), most of the research so far has focused on exploring the voluntary rather than the mandatory disclosure (Einhorn, 2005), despite the fact that both mandatory and voluntary disclosure are potentially important (Omar & Simon, 2011).

Traditionally, socio-environmental disclosure has been voluntary and entitled as sustainability reports or Corporate Social Responsibility disclosure (CSRD). However, governments and stock exchanges around the world are increasingly imposing mandatory disclosure requirements. In comparison with voluntary socio-environmental disclosure, mandatory socio-environmental disclosure policy is claimed as a better communication platform which would provide the much needed push for businesses to go beyond social and environmental practices (Mobus, 2005). This is due to the fact that mandatory disclosure directly exposes business organizations toward public scrutiny thus engendering them to seriously consider the social and environmental consequences of their activities.

Unlike the empirical research regarding voluntary disclosure, which has several decades' years of history, the literature concerning the compliance with mandatory social and environmental disclosure requirements is much more recent. The increase in the number of mandatory socio-environmental disclosure requirements at international and national level in recent years has resulted in considerable growth in the number of studies on the mandatory socio-environmental disclosure.

According to KPMG (2015), in 2015 eight countries with a corporate responsibility reporting rate of 90% or above have mandatory reporting requirements: India, Indonesia, Malaysia, South Africa, UK, France, Demark and Norway. In some countries, reporting legislation has been introduced by governments (France, Indonesia, and South Africa) and in others by stock exchanges (Brazil, Malaysia, and Singapore). Requirements may cover a board range of socio-environmental issues or have a specific target such as Greenhouse gas (GHG) emissions (the UK), conflict minerals (the US), or social responsibility (India).

At international level, several frameworks of social and environmental information disclosure have been also proposed worldwide to satisfy stakeholders' information needs such as the Global Reporting Initiative (GRI) published by Sustainability Reporting Guidelines or the Global Compact issued by the United Nations in 2000.

In this paper we analysis the mandatory socio-environmental disclosure in the Vietnam's stock exchange as a relevant example of regulation. Social and environmental disclosure requirements brought by the Circular No. 155/2015/TT-BTC affect all listed companies in Vietnam. It involves the material extension of disclosure obligations; all listed companies are required to issue a yearly social and environmental disclosure, since 31st December 2016. There are 16 information that companies must disclose spanning social (employment, health and safety), environmental (materials uses, waste management, energy and water consumption), and societal categories (relations with local community).

This paper attempts to examine whether listed companies in Vietnam comply with mandatory socio-environmental disclosure and what determinants affect such compliance. As several authors like Galani et al. (2011); Kaya (2016); and Sani (2018) state that Positivist Accounting Theory helps explain compliance with promulgated regulations based on corporate characteristics and it should take into account the following theories: Agency theory, Signaling theory, and Political theory. …

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