Better disclosure means higher share prices for UPCoM firms: HNX

Thursday, Nov 14, 2019 08:20

A corner of the Binh Son Refining and Petrochemical Corporation's plant in Dung Quat Economic Zone. — Photo

Listed companies should make corporate news more transparent to boost share prices, according to the Ha Noi Stock Exchange (HNX).

A total 237 companies on the Unlisted Public Company Market (UPCoM) – a HNX sub-market – have joined the listed firms’ assessment of information disclosure for 2018-19.

The number of assessed firms was up by 77 from the previous year. Those firms’ value accounted for 75.7 per cent of the market’s total.

The results showed large-cap firms on UPCoM scored an average 61.40 points, up 1.65 points from 2018. Fifty-three per cent of the 237 firms were graded above standard level.

Large-cap firms in the UPCoM-Large basket such as Bac A Joint Stock Commercial Bank (BAB), Binh Son Refining and Petrochemical JSC (BSR) and Idico Corporation (IDC) that have larger market cap and total assets had a higher average score than smaller firms.

Companies with higher State ownership performed better in disclosing their information, but it was unclear whether foreign ownership had a good impact on disclosure.

HNX said the normal desire of foreign investors to boost the quality of information disclosure would disappear when Viet Nam’s standards met international practices.

Companies with the chairman of the board of directors not acting as general director had better results than those with chairmen also as the firm’s CEO.

Similar results were found in companies with a board of directors against those without one, and in firms that had internal rules of corporate governance.

In addition, disclosure quality was closely connected with earnings, which was evaluated upon firms’ return-on-equity (ROE) and return-on-asset (ROA) ratios. A ROE growth rate of 0.17 per cent and a ROA growth rate of 0.08 per cent mean the firm’s score gained 1 per cent.

The HNX recently gave the best disclosure awards to the top 10 large-cap firms on UPCoM for 2018-19. They included Military Insurance Corporation (MIG), Idico Corporation (IDC), PetroVietnam Oil Corporation (OIL), the Vietnam International Joint Stock Commercial Bank (VIB) and the Vietnam Pharmaceutical Corporation JSC (DVN). — VNS

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