Investor confidence hinges on stronger corporate governance and transparency

Investor confidence hinges on stronger corporate governance and transparency

Vietnam’s push to deepen its stock market is putting greater focus on corporate governance, financial reporting and transparency as foundations for lasting investor confidence.

On September 8, the State Securities Commission (SSC) held a conference on improving the quality of corporate governance, financial reporting and transparency in the stock market in Hanoi.

The conference was held as Vietnam’s stock market continues to pursue stable and sustainable development and market upgrading under the Stock Market Development Strategy through 2030.

The quality of corporate governance, the reliability of financial statements and information transparency were identified as key foundations for strengthening investor confidence, enhancing the market’s ability to mobilise medium- and long-term capital for the economy, and improving corporate competitiveness.

At the conference, state-owned enterprises such as Petrovietnam were also highlighted for their efforts to strengthen corporate governance practices across their subsidiaries as well as at the group level. Other prominent examples include Vinamilk, PAN Group and a number of other businesses.

Deputy Minister of Finance Nguyen Duc Chi said the conference would provide a foundation for pursuing a key objective: raising the quality of corporate governance to ASEAN standards and aligning with good governance practices promoted by the OECD in the near future.

“We share a common understanding of this, and I want to see more Vietnamese businesses move beyond simply recognising the importance of good corporate governance and take the next step towards higher standards,” Chi said, noting that good corporate governance first benefits the businesses themselves, before benefiting the market and the broader economy.

Deputy Minister of Finance Nguyen Duc Chi's speech at the conference. Photo: Manh Tuan

The deputy minister said he would ask relevant agencies under the Ministry of Finance to work with businesses that are already performing well in corporate governance, listen to their recommendations and provide focused support, with the aim of turning these leading examples into drivers that can encourage other businesses to improve and develop alongside them.

“Only when corporate governance is strong and information is transparent can the stock market develop sustainably. This is almost a mandatory requirement, because the stock market demands the highest level of transparency, while confidence is extremely important," said Chi.

"Without genuinely good corporate governance, transparent governance-related information and assurance of such transparency in the stock market, it is impossible to build a sustainable stock market. Therefore, we need very specific solutions, both in terms of the legal framework and incentive mechanisms,”

SSC chairwoman Vu Thi Chan Phuong stressed that market upgrading should not be viewed as an end in itself, but rather as a milestone marking the beginning of a new stage of development, with higher requirements for Vietnam’s stock market.

“A larger market with higher liquidity and stronger inflows of international capital can only develop sustainably when accompanied by a corresponding improvement in the quality of market participants. “The quality of corporate governance, financial reporting and corporate transparency are among the core foundations,” said Phuong.

“These are not merely requirements for legal compliance, but also factors that directly determine corporate quality, the efficiency of capital allocation, the ability to protect investors’ legitimate rights and interests, and, more importantly, investor confidence in Vietnam’s stock market.”

The State Securities Commission's chairwoman Vu Thi Chan Phuong. Photo: Manh Tuan

Phuong said that in recent years, the legal framework governing corporate governance, financial reporting and information disclosure for public companies and enterprises had been gradually strengthened.

“Corporate governance principles are increasingly being incorporated into securities legislation in line with international standards and practices. Many listed companies and public companies have also made positive progress, paying greater attention to the quality of board operations, risk management, investor relations, shareholder rights and the quality of information disclosure,” she said.

These are notable achievements that need to be further strengthened. However, Phuong also pointed to the reality that the quality of corporate governance, financial reporting and information transparency still has shortcomings that need to be addressed.

“There are still cases involving errors and delays in disclosure that require financial statements to be adjusted or restated. The quality of disclosed information remains uneven across businesses. These shortcomings directly affect investment decisions and, more importantly, undermine investor confidence in the stock market,” she said.

VIR