A STUDY OF THE IMPACT OF CORPORATE

GOVERNANCE ON SHAREHOLDER SATISFATION AT

MILITARY COMMERCIAL JOINT STOCK BANK, VIETNAM

MBA Dissertation

Nguyen Thi Phuong Hien

2020

i
 A STUDY OF THE IMPACT OF CORPORATE
GOVERNANCE ON SHAREHOLDER SATISFATION AT
MILITARY COMMERCIAL JOINT STOCK BANK, VIETNAM

Supervisor Name: PhD. Nguyen Do Quyen

Master of Business Administration

By Student name: Nguyen Thi Phuong Hien

Registration No:

Academic Year 2018 - 2019

University of Sunderland
Copyright University of Sunderland, No part of this publication may be reproduced with- out the prior written
permission of the copy right owner

ii
 Abstract

It is proven that shareholder satisfaction has greatly impacts on the sustainable

development of companies. In contrast, corporate governance - main internal element of
companies also links closely to shareholder satisfaction. Companies that have high
shareholder satisfaction not only gain sources and competencies to successfully overcome
fierce competitions, but also help minimize risk for businesses and build trust with potential
investors and regulators. Shareholders are more and more concerned about corporate
governance of companies because they understand their rights from and responsibilities for
their own investments along with impacts of Corporate Governance on the effectiveness of
their investments. The study surveyed 397 shareholders of Military Joint Stock Bank,
Vietnam who were living in Vietnam in a two months period, from December 2019 to January
2020 through an adapted questionnaire on a 5-point Likert scale. Cronbach's Alpha and
multiple regression analysis were used to test the relationship between impact factors from
corporate governance and shareholder satisfaction. The research result showed that there
were six factors of corporate governance that might affect shareholder satisfaction with MB:
Information Accessibility (IA), Rights of attending and voting at AGMs (AV), Right of receiving
dividends (RD), Brand Reliability (BR), Equitable Treatment (ET) and Shareholder Engagement
(IR). Among these six factors, shareholder satisfaction with MB’s corporate governance has been
affected by three factors with significance level 5 percent, except IA, AV and RD. Of these three
factors, Brand Reliability (BR) was the most important one that contributes more than 31% to
the satisfaction of shareholders with the bank. With these findings, the researcher has some
suggestions and recommendation for MB to improve its’ shareholder satisfaction in the future.

iii
 Dissertation Declaration
Statement of Originality and Authenticity

I confirm that the dissertation I am submitting is an original and authentic piece of

work compiled by myself that satisfies the University rules and regulations with respect to
Plagiarism and Collusion. I further confirm that I have fully referenced and acknowledged all
material incorporated as secondary resources in accordance with the Harvard System.

I also certify that I have taken a copy of the dissertation, which I will retain until after
the Board of Examiners has published the results, and which I will make available on
request in pursuance of any appropriate aspect of the marking and moderation of the work
within the University Regulations.

Name: Nguyen Thi Phuong Hien

Registration:

Course: Master of Business Administration – FTU - Sunderland

Date: March 30,2020.

Signed:

Please note that Dissertations will not be assessed without the inclusions of this
declaration by the student.

iv
 Acknowledgements
In order to finish this Master thesis, I was granted a lot of assistance, guidance and
supervision from supervisor, respondents and supporters. Therefore, I want to thank to all who
support, direct and motivate me throughout the process of completing the research. Especially, I
would like to express my special thanks of gratitude to my supervisor Nguyen Do Quyen, PhD
who guided and suggested me a lot of valuable comments to complete my thesis.

Moreover, I want to thank Faculty of International Education - FTU for supports, my

senior and colleges at Military Joint Stock Bank who give me important information and advice
on corporate governance of the bank, and all the respondents who have paid time to get
through the entire survey with their enthusiastic and supporting manner. Thanks are extended
to everyone who encouraged and guided me to finish my research work directly and indirectly.

Last but not the least, I am particularly grateful for my family, my friends who were
spiritual inspiration to cheer me up because of their trust and support.

v
 List of Figures
Figure II-1- Development Process of Sustainable Development .............................................................. 17
Figure II-2- The basic corporate governance system & The relationships between the governing
bodies ................................................................................................................................................................. 18
Figure II-3- Vietnam corporate governance scores over 5 years of assessment 2012 - 2017............. 20
Figure II-4- The OECD Principles of Corporate Governance .................................................................... 22
Figure II-5- Levels&Potential Benefits of Good Corporate Governance .................................................. 24
Figure IV-1- MBB Comparative Price Performance (adjusted) (01/2016-01/2020) ............................... 40
Figure IV-2- MB’s Shareholder Structure on 31th December 2019 .......................................................... 42
Figure IV-3- Shareholder satisfaction among gender groups .................................................................... 48
Figure IV-4- Shareholder satisfaction among nationality groups .............................................................. 48
Figure IV-5- Shareholder satisafaction among groups of time .................................................................. 49
Figure IV-6- The assessments on MB’s corporate governance in 2019 .................................................. 52
Figure IV-7- MB’s Organization Structure ..................................................................................................... 53
Figure V-1- MB’s Corporate Governance Implementation Process ...................................................59
Figure V-2- Three factors are the hallmark of a successful shareholder engagement program .........60
Figure V-3- The transformation from management control to independent boards............................61
Figure V-4- The learning board model ..............................................................................................65
List of Tables
Table II-1 - Tighter regulations on prevention of conflict of interests under The Decree 71 ................. 23
Table II-2- Two options for the organizational structure of public companies under Decree 71 .......... 24
Table IV-1- Demographic variables ............................................................................................................... 34
Table IV-2- Cronbach's Alpha (Brand Reliability- BR) ................................................................................ 34
Table IV-3- Interested in Brand Reliability .................................................................................................... 35
Table IV-4- Cronbach's Alpha (Information Accessibility - IA) ................................................................... 36
Table IV-5- Cronbach's Alpha (Rights of Attending and Voting at AGMs- AV) ....................................... 37
Table IV-6- Numbers of shareholders attending Annual General Meetings of MB ................................ 38
Table IV-7- Cronbach's Alpha (Rights of Receiving Dividends - RD)....................................................... 38
Table IV-8- The dividend payout ratio of banks in Vietnam ....................................................................... 39
Table IV-9- Share price of MB and capitalization for the period 2015 - 2019 ......................................... 39
Table IV-10- Cronbach's Alpha (Equitable treatment- ET)......................................................................... 40
Table IV-11- Shareholders Structure of MB on 31th December 2019 ..................................................... 43
Table IV-12- Cronbach's Alpha (Shareholder Engagement- IR) ............................................................... 44
Table IV-13- Cronbach's Alpha (Shareholder Satisfaction- SS) ............................................................... 45
Table IV-14- Correlations and ANOVA (Shareholder Satisfaction- SS) .................................................. 46
Table IV-15- Model Summary ......................................................................................................................... 47
Table IV-16- Coefficients ................................................................................................................................. 47
Table IV-17- ANOVA (Shareholderes’gender) ............................................................................................. 48
Table IV-18- ANOVA (Shareholders’ age) .................................................................................................... 48
Table IV-19- ANOVA (Shareholders’ nationality) ........................................................................................ 48
Table IV-20- ANOVA (Time being MB’s shareholder) ................................................................................ 49
Table IV-21- Corporate governance at MB and other banks in Vietnam ................................................. 50
Table IV-22- The information of MB’s BOD .................................................................................................. 54

vi
 List of Abbreviations
ADB : Asian Development Bank
AGM : Annual General Meeting
AV : Rights of attending and voting at Annual General Meetings
BID : Joint Stock Commercial Bank for Investment and Development of Vietnam
BOD : Board of Directors
BOM : Board of Managers
BR : Brand Reliability
CAGR : Compounded Annual Growth Rate
CAR : Capital Adequacy Ratio
CEO : Chief Executive Officer
COSO : Committee of Sponsoring Organizations of the Treadway Commission
CSR : Corporate social responsibility
CTG : Vietnam Joint Stock Commercial Bank for Industry and Trade
Decree 71 : Decree No. 71/2017 / ND-CP issued by Vietnam Government
EBITA : Earnings before interest, taxes and amortization
EFA : Exploratory Factor Analysis
ET : The equitable treatment
EVA : Economic Value Added
FTU : Foreign Trade University
HSX : Ho Chi Minh Stock Exchange
IA : Information Accessibility
ICGN : International Corporate Governance Network
IDS : Information Disclosure Software system of the State Securities Commission of Vietnam
IFC : International Finance Corporation
IR : Investor Relationship/The shareholder engagement
ISO : International Organization for Standardization
KMO : Kaiser-Meyer-Olkin
LOE : The 2014 Law on Enterprises of Vietnam
MB/MBB : Military Commercial Joint Stock Bank, Vietnam
MVA : Market Value Added
NPL : Non-Performing Loan
OECD : The Organization for Economic Co-operation and Development
PLCs : Public listed companies
RD : Right of receiving dividends
R&D : Research and Development
ROE : Return on Equity
SB : Supervisory Board
SCIC : State Capital Investment Corporation
SEC : The Securities and Exchange Commission of the United States
SPSS : Statistical Package for the Social Sciences
SS : Shareholder satisfaction
SSC : State Securities Commission of Vietnam
TSR : Total Shareholder Return
Vinashin : Vietnam Shipbuilding Industry Group
VCB : Joint Stock Commercial Bank for Foreign Trade of Vietnam
Viettel : Military Industry - Telecommunications Group
VND : Viet Nam Dong
VPB : Vietnam Prosperity Joint-Stock Commercial Bank
WACC : Weighted Average Cost of Capital

vii
 Table of Contents
ABSTRACT III
DISSERTATION DECLARATION IV
STATEMENT OF ORIGINALITY AND AUTHENTICITY IV
ACKNOWLEDGEMENTS V
LIST OF FIGURES VI
TABLE OF CONTENTS VIII
CHAPTER I: INTRODUCTION 10
1.1. RATIONAL OF THE RESEARCH 10
1.2. RESEARCH OBJECTIVES 11
1.3. RESEARCH QUESTIONS 11
1.4. THE SCOPE OF STUDY 12
1.5. RESEARCH METHODOLOGY 12
1.6. RESEARCH RESULT 14
1.7. STRUCTURE OF THE RESEARCH 14
CHAPTER II: LITERATURE REVIEW ON SHAREHOLDER SATISFACTION WITH
CORPORATE GOVERNANCE 15
2.1. SHAREHOLDER SATISFACTION 15
2.1.1. Definitions of Satisfaction 15
2.1.2. Definitions of Shareholder Satisfaction 15
2.1.3. Main factors affect Shareholder Satisfaction 16
2.2. CORPORATE GOVERNANCE 17
2.2.1. The origin of Corporate Governance 17
2.2.2. Definitions of corporate governance 18
2.2.3. Literature review on shareholder satisfaction with corporate governance 19
2.2.3. The factors of corporate governance with shareholder satisfaction 24
3.1. RESEARCH DESIGN 29
3.2. DATA COLLECTION METHODS 29
3.3. QUANTITATIVE RESEARCH - SAMPLING DESIGN 30
3.3.1. Population 30
3.3.2. Sampling Techniques and Size 30
3.3.3. Questionnaire Development 31
3.4. QUALITATIVE RESEARCH 31
3.4.1. Qualitative design and techniques 31
3.4.2. Data analysis procedure 32
3.5. METHODS FOR VERIFICATION 33
3.6. REGRESSION MODEL OF SHAREHOLDER SATISFACTION 33
4.1. DEMOGRAPHIC VARIABLES 34
4.2. THE IMPACTS OF CORPORATE GOVERNANCE ON SHAREHOLDER SATISFACTION 34
4.2.1. Brand Reliability (BR) 34
35

viii
 4.2.2. Information Accessibility (IA) 36
4.2.3. Basic rights of attending and voting in Annual General Meetings (AV) 37
4.2.4. Rights of Receiving Dividends (RD) 38
4.2.5. The equitable treatment of shareholders (ET) 40
4.2.6. The shareholder engagement (IR) 44
4.3. SHAREHOLDER SATISFACTION IN CORPORATE GOVERNANCE AT MB 44
4.3.1. Regression Analysis of shareholder satisfaction at MB 44
4.3.2. Shareholders’ Gender and satisfaction in corporate governance 47
4.3.3. Shareholders’ age and satisfaction in corporate governance 48
4.3.4. Shareholders’ nationality and satisfaction in corporate governance 48
4.3.5. Time is MB’s shareholder and satisfaction in corporate governance 49
4.4. GAPS IN CORPORATE GOVERNANCE OF MB AND ADVANCED PRACTICES 49
4.4.1. Comparison between corporate governance at MB and other banks in Vietnam 49
4.4.3. Comparison between corporate governance in MB and advanced practices 52
5.1. DISCUSSION OF FINDINGS 58
5.1.1. Demographic Variables and Shareholder satisfaction 58
5.1.2. Regression model of shareholder satisfaction 58
5.2. DIRECTION FOR DEVELOPMENT OF MB IN PERIOD OF 2017 - 2021 58
5.3. RECOMMENDATIONS 60
5.3.1. Solutions in developing an effective shareholder engagement strategy: 60
5.3.2. Solutions in governance structure: 61
5.3.3. Solutions in implementing the equitable treatment of shareholders 62
5.3.4. Solutions in implementing Disclosure and Transparency 63
5.3.5. Solutions in implementing the responsibilities of the board 64
5.4. LIMITATION OF STUDY 66
5.5. FUTURE WORK 66
APPENDICES 67
REFERENCES 72

ix
 CHAPTER I: INTRODUCTION
1.1. RATIONAL OF THE RESEARCH
It is proven that shareholder satisfaction has greatly affected on the sustainable
development of companies. In contrast, corporate governance - main internal element of
companies also links closely to shareholder satisfaction. Companies that have high shareholder
satisfaction not only gain sources and competencies to successfully overcome fierce
competitions, but also help minimize risk for businesses and build trust with potential investors
and regulators. Shareholders are more and more concerned about corporate governance of
companies because they understand their rights from and responsibilities for their own
investments along with impacts of Corporate Governance on the effectiveness of their
investments.
Corporate governance has become a familiar and increasingly popular term in Vietnam
since the introduction of the 1999 Law on Enterprises leading to the role of the private sector in
economic development and job creation in Vietnam. It has been more focused by the
Government of Vietnam, companies and shareholders since many recent notable issues (the
default of Vietnam State owned corporation such as Vietnam Shipbuilding Industry Group
(Vinashin) in 2010; high risks and mutual dependence of the banking system resulting from
interest groups and cross-ownership between big banks, etc.). The companies have been
paying more attention on shareholder satisfaction since many notable issues on corporate
governance related to relationships with shareholders (Uber wanted to IPO with a $120 billion
valuation but ran into trouble when some of its biggest shareholders held out for a lower price.1
Eximbank in Vietnam could not even organize the Annual General Meeting (AGM) of 2019, and
cancelled on two occasions because of the infighting between different groups of its
shareholders,2 etc.).

Military Commercial Joint Stock Bank, Vietnam (MB, stock code MBB, logo: )
was established on 4th November 1994 and has affirmed its solid position among the Top five
commercial joint stock banks in Vietnam with charter capital of VND 23,727 billion, total
assets of VND 398,557 billion, more than 9,780 employees working at 300 transaction offices
and over 44,811 shareholders (including individual and corporate, domestic and foreign
stakeholders) in 31 December 2019. As a listed bank on Ho Chi Minh Stock Exchange (HSX)

1
Becky Peterson (2019) Uber wanted to IPO with a $120 billion valuation but ran into trouble when some of its biggest shareholders held
out for a lower price, Available at: https://www.businessinsider.com/ubers-desired-120-billion-ipo-valuation-scared-off-big-shareholders-
2019-5 (Accessed: 20th March 2020).
2
Kim Giang (2019) Investors doubt stock value of Eximbank, Available at: https://saigondautu.com.vn/investment-finance/investors-
doubt-stock-value-of-eximbank-70577.html (Accessed: 20th March 2020).

10
since 2011, MB has interested such huge number of shareholders; however, there has not any
study on its shareholders satisfaction or specific research on the relation between the bank’s
governance and its shareholders satisfaction. In the context that laws and practices make stricter
requirements on corporate governance to ensure shareholder rights, the role of shareholders is
increasingly asserted, it has been more and more essential for MB to study and implement
advanced practices of Corporate Governance to enhance its shareholders satisfaction.
After studying principles of Corporate Governance and experiences from
shareholder’s relation at MB, the author selected the research topic “A Study of the impact
of Corporate Governance on Shareholder satisfaction at Military Commercial Joint
Stock Bank, Vietnam”.
1.2. RESEARCH OBJECTIVES
The overall objective of the research is to examine the corporate governance on
shareholder satisfaction at MB. Therefore, research objectives in details can be demonstrated
as bellows:
Firstly, the research systematizes basic theories in shareholder satisfaction with
corporate governance (Definitions, main factors of corporate governance impact on
shareholder satisfaction).
Secondly, the research analyzes the current situation of MB’s shareholder satisfactions
and the corporate governance of MB in comparison with advanced practices (OECD Principles,
Vietnam legal and regulation documents relating to Corporate Governance, etc.); disclosing
strengths, weaknesses of corporate governance in MB and then understanding, reasoning
the real issues related to its current level of shareholder satisfaction.
How MB perceives and implements regulations, advanced practices relating to
corporate governance and how shareholders evaluate shareholder service standards of MB
are two main factors that affect positively or negatively the efficiency (which can be seen
through the financial performance and rewards of the bank) and the value of the bank in the
market (which can be evaluated by market value of the stock of the bank).
Thirdly, the research proposes solutions and recommendations to improve the bank’s
shareholder satisfaction through enhancing corporate governance in MB, contributing to the
sustainable development of the bank.
1.3. RESEARCH QUESTIONS
i. What are the important elements of corporate governance that can affect on the
shareholder satisfaction?
ii. How are shareholders satisfied with current practices of corporate governance at MB?

11
 iii. What are gaps in elements of corporate governance that can affect on the shareholder
satisfaction of MB in comparision with advanced practices (OECD principles, Decree No.
71/2017 / ND-CP, etc.)?
iv. What are solutions and recommendations to improve the bank’s shareholder
satisfaction through enhancing corporate governance in MB?
1.4. THE SCOPE OF STUDY
This study looks at corporate governance and its impact on shareholders’ satisfaction
at MB. Seeking to analyze the implementation of corporate governance at MB in 5 recent
years (2015, 2016, 2017, 2018 and 2019) through evaluations of some institutions and
undertaking a survey sample which was given to 190 shareholders who had attended the
general annual meeting of MB in 2019 and 207 shareholders of MB in Vietnam through an
online survey in December 2019 and January 2020, the research aims to find out which
elements of corporate governance impact on Shareholder Satisfaction. The study was
undertaken based on individual interviews, observations in MB and some famous case
studies in Vietnamese banking system about the corporate governance and its’ impacts on
shareholders’ satisfaction. In this dissertation, the study focuses on corporate governance
issues in the banking sector. The study limits to the scope to particular governance matters
relating to shareholder’s perspective.
1.5. RESEARCH METHODOLOGY
A combination of quantitative and qualitative data which were both prime and
secondary was proposed in the research to support each other, both through a triangulation
of findings and by building on each other (for example, findings from a qualitative study can
be used to guide the questions in a survey).
In the study, the quantitative data was used to have greater direct access to the
affected population through investigating a particular group of MB shareholders. Because of
time and access constraints, the quantitative secondary data was used to enhance a better
understanding of the situation at the site level and help banks recognize trends of applying
advanced practices of corporate governance in Vietnam through showing the analyses,
scorecards of other institutions (for example: Asian Development Bank (ADB), International
Finance Corporation (IFC), etc.).
To test the causality or link between the corporate governance and the satisfaction of
shareholders in MB, the quantitative approach was used to seek a level of control of the
different variables (how the bank understand and implement the basis for an effective
corporate governance framework; how the bank ensure the rights and equitable treatment of

12
shareholders, key ownership functions, etc.) that may lead to the corresponding
respondents in shareholder satisfactory. The research questions are also concerned with
how MB’s investors, customers evaluate the corporate governance in the bank.
Majority of data used to build a shared picture of the factors that affected the corporation
governance in the banks came from qualitative secondary sources such as public and reliable
reports, researches of international institutions and Vietnam state agencies. However, there
have been not many updated data, so the researcher intends to seek more relevant information
from reports of institutions, speech of famous experts, leaders on public articles and
newspaper. The qualitative approach with a small scale of survey, observations in MB and
some famous case studies in Vietnamese banking system were used to evaluate trends of
thoughts, understanding of bankers and shareholders, and then to identify patterns of
shareholder and investor behaviors in interaction with corresponding levels of corporate
governance in Vietnamese banks.
Descriptive research design was employed for the research topic to establish the
determinants of corporate governance in MB through observing, describing, explaining and
validating research findings.
The main techniques for the study are survey (giving a questionnaire sample for
shareholders of MB) and some expert, professional analyses for quantitative method;
interviews and discussion with supervisors, seniors in MB and other people in banking
system, etc. (~ 20 people) for qualitative method. Observations and famous case studies in
Vietnamese banks are also valuable sources for qualitative research.
The researcher uses Slovin’s Formula 3to figure out what sample size needed to take
(The number of MB’s shareholders (n) that the researcher will give questionnaire) as bellows:
n = N: (1+ N (e)2)
N: total number of MB’s shareholders on 31 December 2019 → N ~ 44,800 shareholders;
E ~ 5%;
The appropriate sample size for the research was: n = 44,800: (1+ 44,800 (5%)2) → The
number of MB’s shareholders that the researcher did survey: n ~ 390 shareholders.
In Data Analysis stage, all data collected was stored and processed through IBM
SPSS Statistics. In this software, the analytical methods were used to show the relationship
between the impact factors and the shareholder satisfaction. The processed data was
presented in tables and diagram and are analyzed, interpreted to create the final report.

3
Guilford, J. P. (Joy Paul), 1897-1987. (1973) Fundamental statistics in psychology and education / J.P. Guilford, Benjamin
Fruchter, 5th ed., International student ed. edn., New York

13
 The researcher follows some main ethical principles to ensure that the results of
research are valuable, appealing and complied with current laws. Firstly, all information
collected from shareholders of MB is only used for research purposes and does not
adversely affect the interests or images of MB. Secondly, all personal information of the
people from whom the researcher collects information must be kept strictly confidential and
not used for other purposes. Thirdly, making appointments with interviewees in appropriate
time to gather information is also paid high attention.
1.6. RESEARCH RESULT
The study aims to find the elements of corporate governance at MB that impact on
shareholders’ satisfaction and the levels of impact. By analyzing the current situation of MB’s
shareholder satisfactions and the corporate governance of MB, the study examined how
changes in corporate governance of MB that can improve its shareholders’ satisfaction.
After processing collected data, the author discussed the findings, and then made
some recommendations to help MB imporve its corporate governance in certain aspects of
governance structure, shareholder engagement, and equitable treatment for shareholders,
disclosure and transparency, responsibilities of the board.
1.7. STRUCTURE OF THE RESEARCH
With the topic” A Study of the impact of Corporate Governance on Shareholder
satisfaction at Military Commercial Joint Stock Bank, Vietnam.”, the dissertation structure
includes five main charters as below:
1. Chapter one: Introduction.
2. Chapter two: Literature review on shareholder satisfaction with corporate governance.
3. Chapter three: Research methodology.
4. Chapter four: Research results discussion.
5. Chapter five: Conclusion and Recommendation.

14
 CHAPTER II: LITERATURE REVIEW ON SHAREHOLDER SATISFACTION
WITH CORPORATE GOVERNANCE
2.1. SHAREHOLDER SATISFACTION
2.1.1. Definitions of Satisfaction
Richard F. Gerson, PhD4 defined “Satisfaction” in “Measuring Customer Satisfaction”
(1993) to mean: “meeting requirements, giving customers what they want to and handling
complaint effectively”.
According to Lovelock, Patterson and Walker (1998)5, satisfaction is: “a consumer’s post
- purchase evaluation of the overall service experience … an affective state or feeling reaction
in which the consumer’s needs, desires and expectations … have been met or exceeded.”
According to Cambridge dictionary6, there are some definitions of satisfaction as: “A
pleasant feeling that you get when you receive something you wanted, or when you have
done something you wanted to do”, or “A situation in which your complaint or problem is
dealt with in a way you consider acceptable”.

2.1.2. Definitions of Shareholder Satisfaction

As defined in Cambridge dictionary, “Shareholder is a person who owns shares in a
company and therefore gets part of the company's profits and the right to vote on how the
company is controlled.”7
According to Andrew Keay (2013), “shareholders are effectively the owners of the assets
of the company… The shareholders should be able to have the assets managed in their favour.”8
The Companies Act 2001 defines a shareholder as: “a) a person whose name is
entered in the share register as the holder for the time being of one or more shares in the
company; b) until the person’s name is entered in the share register, a person names as a
shareholder in an application for the registration of a company at the time of incorporation of
the company; c) until the person’s name is entered in the share register, a person who is
entitled to have his name entered in the share register, under a registered amalgation
proposal, as a shareholder in an amalgmated company”9.
From broad definitions of satisfaction, Shareholder Satisfaction can be defined in
more narrow way such as “A situation in which shareholders’ needs or wants can be

4
Richard F. Gerson PhD (1993) Measuring Customer Satisfaction, USA: Course Technology, Thomson Learning.
5
Lovelock, C.H., Patterson, P.G., & Walker, R.H (1998) Services marketing: Australia and New Zealand, Sydney: Prentice - Hall.
6
Cambridge University Press (2019) satisfaction, Available at: https://dictionary.cambridge.org/dictionary/english/satisfaction
(Accessed: 11th December 2019).
7
Cambridge University Press (2019) Shareholder, Available at: https://dictionary.cambridge.org/dictionary/english/shareholder
(Accessed: 16th December 2019).
8
Andrew Keay (2013) The Enlightened Shareholder Value Principle and Corporate Governance, New York: Routledge.
9
Mauritius Institute of Directors (MIoD) (2014) Engaging Shareholders - A guide for Boards: PwC.

15
fulfilled so that they can get pleasant feelings.” Or “It is the shareholder’s perception
that his or her expectations have been met or surpassed.”
Some shareholders seek consistently strong growth in EBITA (Earnings before
interest, taxes and amortization), as an indicator of company health. Others prefer to see
strong revenue performance, as an indicator of future earnings. Some hold onto moderately
slow-growing stocks, if they are providing strong dividend income10. In mostly cases,
shareholders often hope to optimize their investments to maximize their value, then
shareholders satisfaction are sticked closedly to their interests and benefits.
To have shareholders’ preferred perspective and continuous investments in business,
the company needs to collaborate with them, both to set their expectations and then to
exceed those expectations. Shareholder satisfaction research is crucial to measure the level
of satisfaction; therefore, the company can find out how to meet its shareholders
requirements and manage them effectively.

2.1.3. Main factors affect Shareholder Satisfaction

As mentioned above, shareholder satisfaction comes from the fulfillment of shareholders
requirements and expectations. Citing Dobbs (2005): “the more shareholder value a company
creates in an effectively regulated market, the better the company serves all its stakeholders”11,
it is important to create shareholder value to meet shareholder satisfaction.
According to studies of Julija Bistrova, Jelena Titko and Natalja Lace of Riga Technical,
Latvia12, the sustainable shareholder value is based on the long-term and stable economic
performance, accompanied by good level of corporate governance, high financial results
accountability, optimal capital structure and high innovative potential. This research found
that high quality corporate governance is being recognized by shareholders and is gaining
importance if the investment horizon is relatively long; moreover, companies with quality
corporate governance offer lower risk as measured by stock beta. In term of capital
structure, the study shows that lower debt level helps companies improve the performance
and the companies with a suffucient level of equity capital have good stock performance. In
term of accountability, it demontrated that accounting gimmicks are able to increase short-
term profitability; however, those will become evident causing profit fall in long - term.
Similarly, reduced R&D expenses can immediately increase profit but it then causes

10
Practical Logic (2019) Shareholder Satisfaction, Available at: https://www.practicallogic.com.au/home-page/what-we-
do/practical-research-2/shareholder-satisfaction/ (Accessed: 16th December 2019).
11
Dobbs, R. (2005) Managing Value and Performance. McKinsey Quarterly Online. Available from: www.mckinseyquarterly.com.
(Accessed: 16th December 2019).
12
Julija Bistrova, Jelena Titko, Natalja Lace (2014) SUSTAINABLE SHAREHOLDER VALUE: ANALYSIS OF VALUE DRIVERS;
Riga Technical University, Latvia, http://dx.doi.org/10.5755/j01.em.19.2.3601.

16
competitive advantage deterioration on the market, which later result in higher R&D costs to
become competitive again.

Understanding of Shareholder's Return Sustainability

Short and Long - term Perspective - Sustainability of Shareholders' Return
Shareholders' Return Measurement: EVA (Economic Value Added), MVA (Market Value Added), TSR
(Total Shareholder Return) ect
Key factors: Plausible corporate governance, Lowest Cost of Capital, Accountability, Innovations

Corporate
Capital Management - Innovation
governance - agency Accountability -
capital structure, WACC potential - R&D
theory, best practice Earnings Quality,
(weighted Average Cost costs of sales,
corporate governance, reporting quality
of Capital) marketing expenses
CEO remuneration

Sustainable Shareholder Value Model Development

Figure II-1- Development Process of Sustainable Development
Source: Julia Bistrova and Natalja Lace (2012) 'Defining Key Factors to Sustain Maximum Shareholder Value', Journal of
Financial Studies & Research, 2012(), pp. 8-9 [Online]. Available at:
http://www.ibimapublishing.com/journals/JFSR/jfsr.html (Accessed: 6th December 2019).
According to Moradi’s research on listed firms on Tehran Stock Exchange (2012)13, capital
structure, dividend policy and corporate governance can increase profitability and shareholder’s
value in long term; however, corporate governance, which aims to solve the agency problem, is
considered to be the main contributor to the company’s shareholder value.
Studies on shareholder value stick to the shareholder theory and consider that the
ultimate corporate goal is shareholder value maximization that is achieve not only by high
profitability, but also by such factors as opitmal capital structure, good level of corporate
governance, accountability and high innovative potential. In this research, the author focuses on
corporate governance and its impact on shareholder satisfaction. Therefore, elements of
corporate governance that can make huge impacts to shareholder satisfaction will be studied.
2.2. CORPORATE GOVERNANCE
2.2.1. The origin of Corporate Governance
“Corporate Governance” incorporates managerial accountability, board structure and
shareholder rights. The issues of governance began with the beginning of corporations
during the 16th and 17th centuries, dating back to the East India Company, the Hudson’s Bay
Company and other major chartered companies. This concept has existed for centuries but

13
Moradi, N. S., Aldin, M. M., Heyrani, F. & Iranmahd, M. (2012). The Effect of Corporate Governance,
Corporate Financing Decision and Ownership Structure on Firm Performance: A Panel Data Approach
from Tehran Stock Exchange. International Journal of Economics and Finance, 4(6), 86-93.http://dx.doi.org/10.5539/ijef.v4n6p86.

17
the name did not come into public until 1970s when the Securities and Exchange
Commission (SEC) of the United States brought a stance on official corporate governance
reforms after the Penn Central Railway’s bankruptcy due to the company’s financial
condition and a wide range of misconduct by Penn Central executives.14

2.2.2. Definitions of corporate governance

There are different concepts of Corporate Governance. In common, Corporate
Governance is often defined as control systems or mechanisms that companies set up to
allocate and manage power and interests between their management, board, shareholders
and other stakeholders.
According to David Larcker, Brian Tayan, (2016), Corporate Governance is defined
as “the collection of control mechanisms that an organization adopts to prevent or dissuade
potentially self-interested managers from engaging in activities detrimental to the welfare of
shareholders and stakeholders”.15
As the Delaware Supreme Court has stated, “the most fundamental principles of
corporate governance are a function of the allocation of power within a corporation between its
stockholders and its board of directors.”16
According to The Organization for
Economic Co-operation and Development
(OECD) - the international benchmark in
corporate governance, “Corporate
governance involves a set of relationships
between a company’s management, its
board, its shareholders and other
stakeholders. Corporate governance also
provides the structure through which the Figure II-2- The basic corporate governance system &
objectives of the company are set, and The relationships between the governing bodies
Source: IFC (2010) Corporate Governance Manual, 2nd edn., Hanoi:
the means of attaining those objectives BACSON.

and monitoring performance are determined.”

The definition of OECD has been quoted by many researchers and has been used as
standards to judge real operation in one company. The OECD Principles of Corporate

14
Nicholas J. Price (2018) What Is the History of Corporate Governance and How Has It Changed?, Available at:
https://insights.diligent.com/corporate-governance/what-is-the-history-of-corporate-governance-and-how-has-it-changed/
(Accessed: 24th December 2019).
15 David Larcker, Brian Tayan, (2016) Corporate Governance Matters (A closer look at organizational choices and their

consequences), 2nd edn., p 7: Pearson Education, Inc.

16 J. Robert Brown, Jr. and Lisa L. Casey (2012) Corporate Governance: Cases and Materials, USA: LexisNexis.

18
Governance provides the framework for the work, identifies the key practical issues: the
rights and equitable treatment of shareholders and other financial stakeholders, the role of
non-financial stakeholders, disclosure and transparency, and the responsibilities of the
board. In this study, the definition of the Principles with a particular focus on the situation in
Vietnam banking system is helpful to evaluate how MB’s corporate governance is similar or
different to other practices in the world. Mapping the governance model of the Principles with
relevant laws of Vietnam (Vietnam Law on Enterprises 2014, Decree 71, etc.) and some other
factors such as Vietnamese culture and politics, the study aims to seek elements of corporate
governance impact on Shareholder Satisfaction at the bank level. It answers the first and
second research questions: “What are the important elements of corporate governance that
can influence on the shareholder satisfaction?” and “How are shareholders satisfied with
current practices of corporate governance at MB?”

2.2.3. Literature review on shareholder satisfaction with corporate governance

i. Literature reviews in the world:
Researchers criticized “Corporate Governance” form because the separation of
ownership and control could lead to inefficient management. In corporate governance, there are
always differences in will and interests between boards, managers, shareholders and other
stakeholders. With good Corporate Governance framework or practice, the company can
protect the interests of investors, shareholders and then satisfy its shareholders.
In “The Wealth of Nations”, Adam Smith quoted that “The directors of such companies,
however, being the managers rather of other people's money than of their own, it cannot well be
expected, that they should watch over it with the same anxious vigilance with which the partners
in a private copartner frequently watch over their own.... Negligence and profusion, therefore,
must always prevail, more or less, in the management of the affairs of such a company.”
Adolphe Berle and Gardiner Means, in ‘The Modern Corporation and Private Property’ in
1932, explained that the higher and higher rise of public corporations and dispersed
ownership has contributed to the fact that no one shareholder has enough shares to be able
to control the company. Accordingly, shareholders have only a passive role in the direction of
the corporation due to their very little influence in the decision - making; control is left to the
managers giving them the free charge of running the corporation.
Till the late 70s of the twentieth century, after the Penn Central Railway’s bankruptcy,
the SEC’s stance on official corporate governance reforms raised the issues of protecting the
interests of shareholders in exercising the rights of company’s ownership and increasing their

19
shares value, the responsibilities of management in companies in order to gain the
harmonization between shareholders and managers benefits.
ii. Literature reviews in Vietnam:

- Part A: Rights of shareholders

- Part B: Equitable treatment of shareholders
- Part C: Role of stakeholders
- Part D: Disclosure and transparency
- Part E: Roles and responsibilities of the board

Figure II-3- Vietnam corporate governance scores over 5 years of assessment 2012 - 2017
Source: IFC& SSC (2020) ASEAN Corporate Governance Scorecard, Vietnam country report 5-year assessment 2012- 2017, HCM.

To raise corporate governance standards of ASEAN public listed companies (PLCs), the
ASEAN Corporate Governance Scorecard project was held with the support of ADB and IFC.
According to the Scorecard assessment for five year (2012 - 2017)17, corporate governance
performance of Vietnam has shown a significant and continuous improvement. Vietnam
corporate governance score reached its highest level in 2017 (from 36.8 points to 41.3 points),
but it has been still far away from its neighbors’ performance (the average score of Indonesia of
70.6, of Philippines of 67.6, and of the highest-scored country of Thailand of 85.7).
In Vietnam, Rights of shareholders - Part A has witnessed the highest growth amongs
all five components with 30.3% rise, reached the average of 6.37/10 points. Significant
17
IFC and SSC (2020) ASEAN Corporate Governance Scorecard, Vietnam country report 5-year assessment 2012- 2017, HCM.

20
improvements are remarkable progress in pre-AGM preparation, procedures and organization
of shareholder meetings, voting procedures, and disclosure of AGM resolutions. PLCs
become more aware of the importance of disclosing information on shareholders engagement
activities to attract investment capital and boost the business reputation amongst investor
community. Shareholders’ access to sufficient and timely information on relevant and material
company information, including one concerning AGM, must be facilitated and encouraged.
Vietnamese PLCs have made good progress in publishing AGM announcement and
documents (In 2017, 32% of companies (compared to 9% in 2015) have sent out notice for all
AGMs and Extraordinary general meetings (EGMs) at least 21 days before the meeting, and
43% (compared to 24% in 2015)). There is a need for further improvement in quality of AGM
Notice and documents to meet ASEAN standards. AGM documents need to be more specific
and include helpful explanation for items that require shareholders’ approval at the meeting;
PLCs should appoint an independent party to validate the votes at AGM.
In 2017, the weight of equitable treatment of shareholders - Part B (with 6.84 point)
reduces to 10. An aspect that not yet received adequate attention from PLCs is the equal
treatment towards foreign shareholders. There are still limitations in providing AGM meeting
documents in English (only 70 companies have annual reports in English).
Part C - Role of Stakeholders, has weight increased to 15%. The average component
score in the 2017 assessment is 5.9/15 points. To gain high score in this section, companies
have to develop coherent policies and concrete actions to protect rights of stakeholders
beside shareholders’s interest, and these policies and corresponding programmes also need
to follow ASEAN standards.
In Part D - Transparency and Disclosure (that has 10.12% increase and reached
12.94/25 points in 2017), major improved is information on ownership structure of large
shareholders, internal shareholders, corporate structures; information on remuneration for
board members and details of their meeting attendance; company financial and non-financial
information. However, Directorships of board members are not fully disclosed as required by
ASEAN standards. This important piece of information helps shareholders not only to evaluate
board members’ commitment but also to identify potential conflicts of interest that might affect
their benefits. Improving English version of company website allows foreign investors to gain
access to material company information that is necessary for their decision-making process.
Part E on board responsibilities has the second biggest increase, up to 14%, and
reached 10.98 over 40 points on average. A marked improvement in Part E is the separation
of supervisory and execution roles in governance structure by splitting CEO and Chairman
21
positions. Improvement can be made by increasing number and percentage of independent
members in BOD to introduce diverse perspectives and better discussion quality, and then to
prevent any potential conflict of interests that may harm shareholders’ benefit.
iii.Corporate governance legal framework:
The G20/OECD Principles of Corporate Governance (2015) provide guidance through
recommendations across the following of six themes. It emphasizes basic rights, equitable
treatment of shareholders and key ownership functions, including the right to information and
participation through the shareholder meeting in key company decisions. It also identifies key
areas of disclosure, such as the financial and operating results, company objectives, major share
ownership, remuneration, related party transactions, risk factors, board members, etc.

Figure II-4- The OECD Principles of Corporate Governance

Source: The G20/OECD Principles of Corporate Governance (2015)

There is a conflict of interest between the minority shareholders and the promoters of a
company which has become one of the concerned issues of corporate governance.
International Corporate Governance Network (ICGN) emphasizes the importance of
equitable treatment of shareholders through one share, one vote and protection of the rights
of minority and foreign shareholders. The ICGN affirms that effective corporate governance

22
practices should focus board attention on optimizing the returns to shareholders with a view to
excel in comparison with the company’s equity sector peer group18.
In good corporate governance practices, benefits of the company and shareholders as
a whole should be first priorities, rather than the interests of one or some groups of
insiders or major shareholders. The 2014 Law on Enterprises of Vietnam (LOE) and legal
documents on corporate governance also have strict regulations to prevent conflict of
interests. Decree No. 71/2017 / ND-CP (Decree 71) issued by Vietnam Government that took
effect on 01 August 2017, provides guidelines on corporate governance applicable to public
companies. The tighter regulations of the Decree 71 aim to prevent conflicts of interests through
restriction applying to the company’s shareholders and shareholders’ related persons.
Table II-1 - Tighter regulations on prevention of conflict of interests under The Decree 71
Circular 121 Decree 71
The chairman of the BOM must not
Chairman of The chairman of the BOM must not
concurrently be the (General) Director under
the Board of concurrently be the (General) Director,
any circumstances. The GMS cannot issue a
managers unless it is approved at the Annual general
resolution to waive such restriction.
(BOM) meeting of shareholders (GMS)
This restriction will take effect on 1 August 2020.
A BOM member of a listed company or large -
scale public company must not serve as a
BOM members of a public company (whether
BOM member of more than 5 other companies,
large-scale or small-scale, listed or non-listed)
BOM except where such member is a BOM member
cannot serve as a BOM member of more than
Members of a company in the same group with the public
5 other companies under any circumstances.
company.
This restriction took effect on 1 August 2019.
This restriction is not applicable to small-scale
public companies.
Circular 21 and Article 162.1 of the LOE In addition to BOM members and (General)
enable transactions between a public Director, Decree 71 requires transactions
Transactions
company and a BOM member or the between a public company and its controllers, any
with Related
(General) Director and their related persons management personnel and their related persons
Persons
but requires special approval from the GMS to be approved by the GMS or the BOM.
or the BOM. This restriction took effect on 1 August 2017.
Source: Self collected from related legal documents

Furthermore, Article 6.2 of Decree 71 provides that the Ministry of Finance shall issue
a (new) standard form of charter for public companies to refer to when drafting their own
charters. The Decree 71 is demonstrated as a positive effort of Vietnam Government in
improving the corporate governance to follow advanced international practices in this
country. However, because of differences in culture, value, characteristics, MB and other
public companies which are required to adopt the Decree need a proper timeline for careful
preparations and effective implementations.

18
INTERNATIONAL CORPORATE GOVERNANCE NETWORK (1999) STATEMENT ON GLOBAL CORPORATE GOVERNANCE
PRINCIPLES, the Annual Conference in Frankfurt.

23
Table II-2- Two options for the organizational structure of public companies under Decree 71
Two-tier structure One-tier structure
- GMS, BOM, Board of Controllers & (General) - GMS, BOM and (General) Director
Non - Director - BOM non-executive members: at least 1/3
listed - BOM non-executive members: at least 1/3 - BOM independent members: at least 1/5
public - BOM independent members: not required - Internal audit committee established under
company - Internal audit committee established under BOM: BOM: required
not required
- GMS, BOM, Board of Controllers - GMS and BOM
- BOM non-executive members: at least 1/3 - BOM non-executive members: at least 1/3
Listed
- BOM independent members: at least 1/3 - BOM independent members: at least 1/3
company
- Internal audit committee established under BOM: - Internal audit committee established under
not required BOM: required
Source: Source: Self collected from related legal documents

Banks are required to comply with stricter regulations, such as the Law on Credit
Institutions, Basel II. Therefore, the banking is the group that has higher corporate
governance scores than the non-banking groups. According to ASEAN Corporate
Governance Scorecard assessment in 2017, banking section reached 47.61 points while Non
- banking section score assessment is 40.81 points. However, high risks and mutual
dependence of the banking system resulting from interest groups and cross-ownership between
big banks might need to be improved to gain shareholders’ confidence and trust.
According to legal framework and researchs in corporate governance above, there are
issues relating to shareholders satisfaction in terms of rights, equitable treatment of shareholders,
disclosure, transparency and brand value or trust. These elements of corporate governance are
discussed in terms of their impacts on shareholder satisfaction in this study as bellows.

2.2.3. The factors of corporate governance with shareholder satisfaction

The shareholders
are one of the major
stakeholder’s as they
supply finance for
companies and thus a need
arises to look into corporate
governance from the
shareholder’s perspective.
The enhancement of
shareholders’ value Figure II-5- Levels&Potential Benefits of Good Corporate Governance
Source: IFC (2010) Corporate Governance Manual, 2nd edn., Hanoi: BACSON.
and protection of
shareholder’s interest are important aspects in studying corporate governance.

24
 Corporate governance is a structure whereby the shareholders own the operation,
managers run the operation and board directors oversee the operation as agents of the
shareholders. Good corporate governance ensures that the company has the proper rules,
policies and practices to create long-term shareholder value. Boards and managers have
responsibilities to shareholders, and shareholders have a responsibility to be active investors19.
Since good corporate governance can serve a number of important public policy objectives, the
company can enhance investor trust, protect minority shareholders, and encourage better
decision making and improved relations with workers, creditors, and other stakeholders. These
also help to ensure the security for shareholders’ long-term investment and give shareholder
peace of mind. Moreover, holding shares of a company with good corporate governance can
be a strong guaranty for a shareholder to other business activities.
2.2.3.1. Brand Reliability (BR)
Brand Reliability is one of the key factors in assessing shareholder trust. Reliability is the
expectation that the brand will consistently perform as envisioned by the customer and
shareholder. Brand Reliability evolves similarly as how trust is formed in interpersonal
relationships. When people act in accordance to the expectations, we hold of them, we come to
trust them. Likewise, when the companies we invest in perform reliably, we come to trust the
brands20. On the other hand, when being shareholders of a company that has high Brand
Reliability, we can be satisfied by the trust and other benefits that are gained from this company.
According to ASEAN Corporate Governance Scorecard in Vietnam, companies with
higher brand reliability and value will gain confidence and trust from shareholders and they
are willing to hold the stocks for long term even when market conditions are less favorable.
There is a correlationship between brand value and corporate performance. Shareholders
prefer to hold shares inwell-known companies and measure corporate performance by
evaluating indicators, including brand awareness.
2.2.3.2. Control rights of shareholders through attending and voting at AGMs (AV)
Adolphe Berle & Gardiner Means in “The Modern Corporation and Private Property”
have outstandingly demonstrated the large passivity characterizing the role of shareholders
in modern corporations21. Accordingly, shareholders have only few opportunities in the case

19
Nicholas J. Price (2019) Why Corporate Governance Is Important to Investors, Available at: https://insights.diligent.com/shareholder-
investor/why-corporate-governance-important-investors (Accessed: 05th February 2020).
20
Lifestory Research (2019) Brand Reliability: Can I Trust You?, Available at: https://www.lifestoryresearch.com/insight-
ideas/brand-trust-reliability (Accessed: 22 nd January 2020).
21
Adolf A Berle, Jr.; Gardiner C Means; Columbia University. Council for Research in the Social Sciences (1932) The modern corporation
and private property, New York: Macmillan.

25
of a board’s election. He can refrain from voting, attend the annual meeting and vote his
stock, or he can sign a proxy transferring his voting power to certain individuals selected by
the management of the corporation, the proxy committee.
According to OECD guidelines accurate and timely disclosure on company objective major
share ownership and voting rights, directors and the executives and their remuneration, significant
foreseeable risk factors, governance structures and practices: material issues regarding
employees and other stakeholders are the important parameters for disclosure and transparency.
Control rights of shareholders through attending and voting at AMGs are regulated in the
LOE. The AGMs, comprising shareholders with voting rights, is the highest decision-making
body in the company. Based on the company’s register of shareholders at the time of having a
decision on convening the shareholders’ meeting (article 137.1 of the LOE) or based on the cut-
off date of the shareholders’ list describing the shareholders entitled to attend the AGMS that is
applied to PLCs, any shareholder holding ordinary shares or shares with preferential votes may
participate in the AGMs and exercise the voting rights associated with their respective shares,
except for those shareholders holding preferential shares without voting rights. A shareholder or
a group of shareholders in a joint-stock company may nominate candidates for the board if they
have held at least 10 percent of the total ordinary shares for a consecutive period of six months
or more unless a lower percentage is set forth in the company’s charter (articles 114.2 and
114.4 of the LOE). Any share with a voting right can be counted in a vote at a shareholders’
meeting, including a meeting for the election of directors.
2.2.3.3. Economic rights of shareholders from receiving dividends and selling shares (RD)
Julian Velasco in “the Fundamental Rights of the shareholder” (2006) demonstrated that
“there are two main ways in which shareholders can profit from a corporation: by receiving
distributions of the company’s profits and by selling all or part of their interest in the corporation”22.
The LOE (article 132) stipulates certain principles for the distribution of profits and
requires that companies set out detailed rules in their charters. A company may distribute profits
(including the payment of dividends by a shareholding company). The distribution of profits
must be made in proportion to the investors’ portion of charter capital. An ordinary shareholder
has the right to receive dividends at the rate decided by the AGMs (articles 114.1 of the LOE).
Shareholdes also can benefit economically by selling their shares at a profit. The LOE (articles
114, 119 and 126) stipulates that a shareholder has the right to freely transfer his/her/its shares
to other persons (except in the cases specified in this law). Therefore, shareholder value and

22
Julian Velasco (2006) The Fundamental Rights of the Shareholder, University of California, Davis.

26
satisfaction can come from the increase in market price of share and preferential dividend policy
of companies.
2.2.3.4. Information Accessibility (IA)
Shareholders need material company information that is necessary for their decision-
making process, implementation of their control and economic rights. Therefore, the
accessibility of appropriate information from companies is an important impact of corporate
governance on shareholder satisfaction. There are related laws and regulations that ensure this
need of shareholders through guidelines and requirements for disclosure of information.
ICGN emphasizes on timely and full disclosure of information such as disclosure of
shareholding and the status of voting rights, disclosure of directors’ compensation policies,
annual audits by external statutory auditors etc.
In Vietnam, Law on Securities, Circular 155/2015/TT-BTC guide the disclosure of
information on the securities market to help shareholders access information accurately, fully and
promptly. Decree 71 requires PLCs to adopt information disclosure rules and to appoint a
specific person to be in charge of information disclosure on behalf of the public company
and other strict requirements in time of publicly disclosing.
Today, companies are judged based on their disclosure policies and systems can
disclose information to shareholders through the establishment of committees to strengthen
disclosure. The State Securities Commission of Vietnam (SSC) has the authority to impose
administrative sanctions on enterprises and individuals who violate disclosure regulations.
To avoid these sanctions, create a safe condition and ensure the protection of shareholders,
companies should comply with related laws and set up approaches for shareholders to
access appropriate information.

2.2.3.5. The equitable treatment of shareholders (ET)

There are two common types of conflict of interest in corporate governance, one between
majority and minority shareholders and the other between management and shareholders. When
ownership is spread among many shareholders, the conflict of interest between management and
shareholders is more prominent. When the ownership is relatively more concentrated, the conflict
of interest between majority and minority shareholders becomes comparatively more prominent23.
According to the OECD principles, all shareholders of the same series of a class
should be treated equally. Therefore, within any series of a class, all shares should carry the

23
OECD (2011) Corporate Governance of Listed Companies in China: Self-Assessment by the China Securities Regulatory
Commission, Paris: OECD.

27
same rights. All investors should be able to obtain information about the rights attached to
all series and classes of shares before they purchase. Any changes in voting rights should
be subject to approval by those classes of shares that are negatively affected. Minority
shareholders should be protected from abusive actions by, or in the interest of, controlling
shareholders acting either directly or indirectly, and should have effective means of redress.

2.2.3.6. Shareholder engagement (IR)

Shareholder engagement includes efforts made by companies to engage with their

shareholders on a wide range of topics including corporate governance and others falling
outside the usual financial and strategic conversations24. Practically, shareholder engagement
activities are often considered as Investor Relation function (IR). Recognizing the value of
effective shareholder engagement and developing an appropriate strategy are important for
companies to enhance their degree of influence in shaping shareholders’ perspectives.

24
Tarun Mehta, Advisor, ISS Corporate Services (2013) 'Shareholder Engagement: Maximizing the Shareholder Relationship', Executive
Compensation Insights, 13.3, pp. 1 [Online]. Available at:
https://www.issgovernance.com/file/publications/MaximizingTheShareholderRelationshipVol_13.3.pdf (Accessed: 18 th February 2020).

28
 CHAPTER III : RESEARCH METHODOLOGY
3.1. RESEARCH DESIGN
Research Design which is considered as types of research methodologies provides
the guidelines for data collection based on selected area and also involves in selection of the
research approach. This study employed Descriptive design which involves observing and
describing the behavior of a subject without influencing it in any way25. Surveys can be
specified as popular data collection method and secondary data in Descriptive design. It was
useful in studying shareholders’ satisfaction with corporate governance at MB.
3.2. DATA COLLECTION METHODS
A combination of quantitative and qualitative data which were both prime and secondary
was proposed in the research to support each other, both through a triangulation of findings and
by building on each other.
The Quantitative method was used to seek to levels of control of the different
variables (how the banks understand and implement the basis for an effective corporate
governance framework; how the banks ensure the rights and equitable treatment of
shareholders, key ownership functions, etc.) that may lead to the corresponding
respondents in shareholder satisfactory. In the study, the primary quantitative data was
collected to have greater direct access to the affected population through Five- point Likert
scale questionnaires with options from (1) “Excellent” to (5) “Unsatisfactory”. All questions
were translated into Vietnamese. To ensure that the right meaning of questionnaires were
understood by the respondents, the pilot-testing stage with ten respondents chosen was
conducted for further adjustment.
Majority of data used to build a shared picture of the factors that affected the corporation
governance in the banks came from qualitative secondary sources. The researcher sought
more relevant information from speech of famous experts, leaders on public articles and
newspaper. The qualitative approach with a small scale of individual interviews, observations
in MB and some famous case studies in Vietnamese banking system was used to evaluate
trends of thoughts, understanding of bankers and shareholders, and then to identify patterns of
shareholder and investor behaviors in interaction with corresponding levels of corporate
governance in Vietnamese banks. Therefore, the study was undertaken based on individual
respondents from interviews, group discussions and observations about the corporate
governance in other banks in Vietnam.

25
Martyn Shuttleworth (2018) Descriptive Research Design, Available at: https://explorable.com/descriptive-research-design (Accessed:
6th February 2020)

29
3.3. QUANTITATIVE RESEARCH - SAMPLING DESIGN
3.3.1. Population
Polit and Hungler (1999) defined the population as an aggregate or totality of all the
objects, subjects or members that conform to a set of specifications. Therefore, the target
population refers to the entire group of individuals or objects that the study’s conclusions are
expected to be drawn about. In this study, the population is total MB’s shareholders of all age
group, nationalities, genders who were living in Vietnam during December 2019 and January
2020. The total number of MB’s shareholders on 31 December 2019 was 40,800 shareholders.

3.3.2. Sampling Techniques and Size

In the study, the primary quantitative data was used to have greater direct access to the
affected population through investigating a particular group of MB shareholders. The researcher
used a structured questionnaire for data collection which included closed style of questions to
help the respondents easily answer the questions as well as yield adequate information based
on research questions.
Polit and Hungler (1999) refer to a sample as a subset of a population selected to
participate in the study, it is a fraction of the whole, selected to participate in the research
project. The number of individuals in the sample depends on the size of the population and how
precisely the researcher wants the results to represent the population as a whole. The
researcher used Slovin’s Formula26 to figure out what sample size needed to take (The number
of MB’s shareholders (n) that the researcher would give questionnaires) as: n = N: (1+ N (e)2).
N: total number of MB’s shareholders on 31 December 2019 → N ~ 40,800 shareholders.
E ~ 5%;
The appropriate sample size for the research: n = 40,800: (1+ 40,800 (5%)2). Therefore, the
number of MB’s shareholders that the researcher would do surveys: n ~ 390 shareholders. In
reality, the reseacher collected responses from 397 shareholders of MB.
Questionnaires were sent directly to shareholders of MB. An online survey with similar
questions was created to help shareholders can receive and answer easily. The primary
quantitative data questionnaires would be collected with shareholders who do procedures at
MB‘s BOD Office and transaction offices of MBS which is MB’s agent in Hanoi. The online
survey templates with similar questions were sent to shareholders through email and other
applications on internet (Viber, Zalo, etc.). These were done with one and a haft month’s period,
from 15th December 2019 to 31th January 2020.

26
Guilford, J. P. (Joy Paul), 1897-1987. (1973) Fundamental statistics in psychology and education / J.P. Guilford, Benjamin
Fruchter, 5th ed., International student ed. edn., New York

30
3.3.3. Questionnaire Development
A questionnaire was developed for collection data from MB’s shareholders. It was
designed based on the factor’s demography, competence, and reliability of bank. Following
guide of Harlacher, J. (2016)27, the questionnaire sample was developed based on some main
criteria as bellows to ensure clarity and avoid bias:
i. Use simple language.
ii. Avoid double - barreled, loads and leading questions.
iii. Avoid questions that elicit socially desirable responses.
iv. Include directions for each type of question.
v. Include an “other” response when the response options may not include all possible ones.
vi. Provide anchor labels for each anchor, when applicable.
vii. Ensure rating scale questions have 4 - 7 anchor points.
viii. Ensure response choices are mutually exclusive, when applicable.
ix. Eliminate or revise questions that may be culturally insensitive or offensive.
A total of 397 respondents were collected and each respondent was asked closed - ended
questions to provide their choice of answers using the 5-points Likert scale which 1 indicate
“Excellent”; 2 “Good”; 3 “Satisfactory”; 4 Needs Improvement”; 5 “Unsatisfactory”.
3.4. QUALITATIVE RESEARCH
3.4.1. Qualitative design and techniques
In this study, the majority of data used to build a shared picture of the factors of
corporation governance in the banks that impact their shareholders comes from qualitative
secondary sources. There have been not many updated data due to the scale and time
consuming of these researches, more relevant information from reports of institutions, speech
of famous experts, leaders on public articles and newspaper could be good choice.
To identify patterns of shareholder behaviors in interaction with corresponding levels of
corporate governance in Vietnamese banks, qualitative primary data were collected through
interviews and discussion with supervisors, seniors in MB and other people in banking
system for qualitative method. Observations and famous case studies in Vietnamese banks
are also valuable sources for qualitative research. Smaller sample sizes which are used in
qualitative research can help researchers save on costs, obtain faster results. Therefore, this
study was undertaken based on 20 individual respondents from interviews, group discussions
and observations about the corporate governance in Vietnamese banks.

27
Harlacher, J. (2016) An educator’s guide to questionnaire development, Washington, DC, US: Department of Education, Institute of
Education Sciences, National Center for Education Evaluation and Regional Assistance, Regional Educational Laboratory Central.

31
 One major challenge in this study is finding the right balance in collecting and analyzing
qualitative information to identify proper trends and overarching issues for affected objects (MB)
and to present these in an appropriate and persuading way. It takes time and resources to collect,
analyze this type of data. Data created through qualitative research is not always accepted by the
scientific community because the scientific community wants to see results that can be verified
and duplicated to accept research as factual. The scope of data gathering can be extremely
limited, and close contact means more difficult to guarantee anonymity and confidentiality.

3.4.2. Data analysis procedure

Data process is the conversion of raw data to meaningful information through a six stages
processing cycle28.
- Collection is the first stage of the cycle that the data gathered are both defined and
accurate, so that subsequent decisions based on the findings are valid.
- Preparation is about constructing a dataset from one or more data sources to be used for
further exploration and processing
- Input is the task where verified data is coded or converted into machine readable form so
that it can be processed through a computer.
- Processing is when the data is subjected to various means and methods of manipulation;
Demographic data will be collected and compared through different types of charts and tables.
The statistical software such as SPSS will be used to solve statistical results from the survey, and
the assessment of the relationship between independent variables and dependent variables.
Data Analysis is a process of inspecting, cleansing, transforming, and modelling data with the
goal of discovering useful information, informing conclusions, and supporting decision-making.
- Output and interpretation are where processed information is now transmitted to the user
to guide future decisions. After data is analyzed in ways that are planned, it is time to
interpret the findings and prepare reports for sharing the program evaluation information.
The researcher has to find out the most effective way of presenting (number or percent,
table or graphic, etc.) his or her work to appeal target audiences.
- Storage is the last stage in the data processing cycle, where data, instruction and information
are held for future use. The storage data is required to be accessible, accurate and reliable.
All quantitative data collected through questionnaires will be stored and processed
through SPSS software. Therefore, the ananytical methods will be used to discover the
relationship between the impact factors from corporate governance and the shareholders’

28
Paul Rudo (2017) 6 Important Stages in the Data Processing Cycle, Available at: http://www.enterprisefeatures.com/6-important-
stages-in-the-data-processing-cycle/ (Accessed: 5th October 2018).

32
satisfaction. In SPSS, Cronbach's alpha is an index of reliability associated with the variation
accounted for by the true score of the "underlying construct."29 Alpha coefficient ranges in value
from 0 to 1 and may be used to describe the reliability of factors extracted from dichotomous
(questions with two possible answers) and/or multi-point formatted questionnaires or scales. The
higher the score, the more reliable the generated scale is. According to Nunnally & Burnstein
(1994), observed variables with Alpha value > 0.6 and Item-Total Correlation < 0.3 could be an
acceptable reliability coefficient and would be excluded.
3.5. METHODS FOR VERIFICATION
In quantitative data collection, to make sure that the questionnaire is clear and valid, the
researcher conducted a pilot - testing for 20 shareholders to collect their feedback, then find out
how to improve the finalize questionnaire. The quantitative data is necessary to enhance a
better understanding of the situation at the site level. The researcher discussed with seniors,
colleagues in MB and supervisor about findings from shareholders’ survey and other
recommendations. Secondary sources are used to build a share picture of the factors of
corporation governance in the banks that might impact shareholders’ satisfaction in
Vietnam. To verify sources of data, the reseacher focused on reports, researches of
international institutions and Vietnam state agencies which are public, reliable and audited
by the third party (Audit Companies).
3.6. REGRESSION MODEL OF SHAREHOLDER SATISFACTION
To examine the relation between six factors of corporate govenance mentioned in
Chapter II (AV, RD, IA, ET, IR, BR) and shareholder satisfaction, by assuming each factor
independently contributes to shareholder satisfaction, the reseacher sets up a regression model
which is computed as: SS = β0 + β1 x AV + β2 x RD + β3 x IA+ β4 x ET + β5 x IR + β6 x BR
Where SS is dependent variable representing Shareholder Satisfaction; six independent
variables (AV, RD, IA, ET, IR, BR) with different level of impacts that are represented by β1-6.

29
J. Reynaldo A. Santos (1999) 'Cronbach's Alpha: A Tool for Assessing the Reliability of Scales', The Journal of Extension, 37(ISSN
1077-5315)

33
 CHAPTER IV: RESEARCH RESULTS DISCUSSION
4.1. DEMOGRAPHIC VARIABLES
The questionnaire included information about shareholders’ profile that was likely to
influence the degree of shareholder satisfaction related to the corporate governance of the bank.
Table IV-1- Demographic variables
Characteristics of Respondents Frequency (n=397) Percentage (%)
Gender
Male 237 59.7
Female 160 40.3
Total 397 100
Age group
Age 22 - 35 155 39.0
Age 35 - 50 181 45.6
Age over 50 61 15.4
Total 397 100
Nationality
Vietnamese 350 88.2
Other nationalities 47 11.8
Total 397 100
Time being MB’s shareholder
Less than 1 year 135 34.0
1- 5 years 175 44.1
Over 5-15 years 63 15.9
Over 15 years 24 6.0
Total 397 100
Source: SPSS data analysis
As can be seen from the table above, there are more male respondents (59.7%) than
females ones (40.3%). People in 35-50 age groups take the first place in the number of
respondents, at about 45.6%, and there is a small gap of 6.6% between this group and the 22 -
35 age group (39.0%). The minority of shareholders are surveyed in the over 50 age group
(15.4%). When classifying answered questionnaire by nationalities, Vietnamese shareholders are
majority (88.2%). In addition, the shareholders being with MB less than 5 years are majority, while
24 people selected MB over 15 years, at about 6.0%.
4.2.THE IMPACTS OF CORPORATE GOVERNANCE ON SHAREHOLDER SATISFACTION
4.2.1. Brand Reliability (BR)
Table IV-2- Cronbach's Alpha (Brand Reliability- BR)
Reliability Statistics

Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items

,696 ,699 2
Item Statistics
Mean Std. Deviation N
Brand Value 1,5239 ,54361 397
Bank 1,5617 ,60665 397
Item-Total Statistics

34
 Scale Mean if Scale Variance Corrected Item- Squared Multiple Cronbach's Alpha if
Item Deleted if Item Deleted Total Correlation Correlation Item Deleted
Brand Value 1,5617 ,368 ,537 ,289 .
Bank Performance 1,5239 ,296 ,537 ,289 .

Source: SPSS data analysis

BR variable is computed by two items: Brand Value and Bank Performance. The
Cronbach’s alpha was 0.699 and Corrected Item-Total Correlation of each item is achieved
with values greater than 0.3 which demontrates that the items form a scale that has
reasonable internal consistency reliability.
In term of performance, in the period of 2015 - 2019, MB maintained a higher growth
rate than the industry average on all indicators such as scale, quality, efficiency and labor
productivity. Total assets increased by 1.88 times, Customer loans increased by 2.18 times,
profit before tax increased by 3.1 times. The NPL ratio is controlled below 1.35%. ROE
maintained over 15%, in 2019 is 21.8%. With the goal of "strict risk management", MB has
improved the full-scale risk management framework towards the bestpractices of the Basel,
COSO, and ISO Committee, and 3-line-risk-management model under Circular 13/2018/TT-
NHNN. MB complies with law, and safety limits set by State Bank, ensuring that the limits are
within the safety threshold and better than the industry average.
Therefore, the bank's position has been enhanced and ranked A grade (highest
grade) in many consecutive years underranking system of State Bank of Vietnam. The credit
rating of MB has increased from B2 to B1 according to international ranking system of
Moody's. MB has been ready to meet the conditions and management capabilities
according to Basel II; and was approved to apply Circular 41/2016/TT-NHNN regarding to
Regulations on capital adequacy ratio for banks, foreign bank branches ahead of schedule.
In 2018, MB was voted among "Top 50 best listed companies in Vietnam" under the Forbes
Vietnam voting program, and ranks 3rd in Vietnam’s Banks listed in Asia Pacific’s 500
strongest banks under the Asian Banker voting program. As the result, 100% repondents
answered that they are interested in the Brand Reliability of MB.
Table IV-3- Interested in Brand Reliability
Frequency Percent Valid Percent Cumulative Percent
Excellent 198 49,9 49,9 49,9
Good 190 47,9 47,9 97,7
Valid Satisfactory 9 2,3 2,3 100,0
Total 397 100,0 100,0

Source: SPSS data analysis

35
4.2.2. Information Accessibility (IA)
Table IV-4- Cronbach's Alpha (Information Accessibility - IA)
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
,956 ,957 7

Item Statistics
Mean Std. Deviation N
Quality of information on MB's website 1,83 ,883 397
Relevance of information on MB's website 1,64 ,771 397
Adequacy of information on MB's website 1,80 ,820 397
Updated information available on MB's website 1,68 ,770 397
Ease and Accessibility while navigating MB's website 1,83 ,881 397
Announcement in the mass media 1,95 ,859 397
Inform via affilates, representative offices and branches 2,08 ,870 397
Item-Total Statistics
Scale Mean Scale Corrected Cronbach's
if Item Variance if Item-Total Alpha if Item
Deleted Item Deleted Correlation Deleted
Quality of information on MB's website 10,97 19,656 ,861 ,948
Relevance of information on MB's website 11,16 20,536 ,865 ,948
Adequacy of information on MB's website 11,00 20,056 ,878 ,946
Updated information available on MB's website 11,12 20,536 ,866 ,948
Ease and Accessibility while navigating MB's website 10,96 19,484 ,889 ,945
Announcement in the mass media 10,84 20,233 ,803 ,952
Inform via affilates, representative offices and branches 10,72 20,303 ,780 ,954

Source: SPSS data analysis

IA variable is computed by seven items related to disclosed information on MB’s
website and other channels that the bank uses to disclose information. The Cronbach’s
alpha was 0.956 and Corrected Item-Total Correlation of each item is achieved with values
greater than 0.3 which demontrates that the items form a scale that has reasonable internal
consistency reliability.
To help shareholders access information accurately, fully and promptly, to comply with
related regulations (Law on Securities, Circular 155/2015/TT-BTC guiding the disclosure of
information on the securities market), the BOD of MB appointed CEO of the bank to the
authorized person to disclose information and appointed Head of the BOD Office to be in
charge of corporate governance in accordance with Decree No.71/2017/NĐ-CP. MB complies
with related regulations that require the bank posted disclosed information on its website
available at “https://mbbank.com.vn/Investor/nha-dau-tu?lang=EN” and other official channels of
the SSC and HSX (such as email, IDS software, etc.). In addition, MB has developed its
Regulation on information disclosure on the stock market (Decision No. 226 QD- MB-HĐQT dated

36
February 26, 2018) which specifies the contents of periodic (quarterly, semi-annually, annually),
extraordinary (within 24 hours and 72 hours) and required information disclosure.
It can be said that MB has noted the right to access information of shareholders in its
related internal regulations, made efforts to fulfill this right and strictly implemented the regulations
on information disclosure. Therefore, MB was ranked among “Top 5 large enterprises meeting
the standard of Information disclosure” in 2017 under the voting program of HOSE, "Top 50
best listed companies in Vietnam" under the Forbes Vietnam voting program in 2018.

4.2.3. Basic rights of attending and voting in Annual General Meetings (AV)
Table IV-5- Cronbach's Alpha (Rights of Attending and Voting at AGMs- AV)
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
,866 ,870 5

Item Statistics
Mean Std. Deviation N
Right of Attending AGMs 1,28 ,470 397
Right of receiving information relating AGMs 1,56 ,670 397
Right of Voting at AGMs 1,33 ,527 397
Right of Approving issues suggested in AGMs 1,36 ,548 397
Right of election and dismissal of the Board members 1,30 ,513 397

Item-Total Statistics
Scale Mean if Scale Corrected Cronbach's
Item Deleted Variance if Item-Total Alpha if Item
Item Deleted Correlation Deleted
Right of Attending AGMs 5,56 3,823 ,472 ,884
Right of receiving information relating AGMs 5,27 3,061 ,598 ,871
Right of Voting at AGMs 5,50 3,099 ,827 ,803
Right of Approving issues suggested in AGMs 5,48 3,028 ,830 ,800
Right of election and dismissal of the Board members 5,53 3,235 ,767 ,819

Source: SPSS data analysis

AV variable is computed by five items related to implementation of rights of attending
AGMs and voting. The Cronbach’s alpha was 0.866 and Corrected Item-Total Correlation of
each item is greater than 0.3 which demontrates that the items form a scale that has
reasonable internal consistency reliability.
Attending, contributing ideas and voting for approval in AGMs are the basic rights of
shareholders that stipulated in the Charter of MB (Article 34). A shareholder or a group of
shareholders of MB who represent over 9% of total voting shares in a continuous period of at
least six months have the right to request the convening of a General Meeting (Article 36 - the
Charter of MB). MB has set up internal regulations, procedures and specific timelines in related
information disclosure (meeting invitation, document, minutes of meetings, etc.) in accordance
with LOE and Circular 155/2015/TT-BTC. The notice of invitation and documents related to AGMs

37
 must be posted on MB's official website and sent hardcopies to shareholders (Article 40 - MB
Charter). As the result, the high number of shareholders who attended MB’s AGMs recently
represented over 70% of total MB’s voting shares.
The Charter of MB (Article 42) clearly stipulates the procedures for attending and
voting of shareholders. Accordingly, MB has made efforts to support its shareholders’ voting
rights. For example, “At the date of the AGM, MB must carry out the procedures for
shareholder registration and must ensure that all shareholders who are present at the AGM
can be registered”. Even if shareholders are late, they have the right to register immediately
and then have the right to participate and vote at the AGM". However, the Chairman does
not need to stop the meeting and the validity of the previous voting will not be affected.
Table IV-6- Numbers of shareholders attending Annual General Meetings of MB
2015
Criterial Unit 2016 2017 2018 2019
The AGM The EGM
The number of
shareholders Share-
476 236 600 296 666 874
attending MB’s holder
general meetings
The number of
represented shares share 866,795,125 1,195,146,875 1,270,572,821 1,219,374,230 1,369,528,420 1,620,904,089
of MB
The represented
proportion of MB’s % 74.76% 74.70% 77.89% 71.19% 75.44% 76.70%
voting shares
Source: Collected from Minutes of MB annual general meeting in 2015, 2016, 2017, 2018 and 2019

4.2.4. Rights of Receiving Dividends (RD)

Table IV-7- Cronbach's Alpha (Rights of Receiving Dividends - RD)
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
,833 ,836 3
Item Statistics
Mean Std. Deviation N
Forms of dividends that MB provides 1,49 ,618 397
Processing time for transfer of MB's shares 1,63 ,753 397
The receipt of Dividend/ECS intimations 1,63 ,708 397

Item - Total Statistics

Scale Mean if Scale Variance Corrected Item- Cronbach's Alpha
Item Deleted if Item Deleted Total Correlation if Item Deleted
Forms of dividends that MB provides 3,26 1,722 ,716 ,758
Processing time for transfer of MB's shares 3,12 1,324 ,792 ,665
The receipt of Dividend/ECS intimations 3,12 1,670 ,597 ,863

Source: SPSS data analysis

RD variable is computed by three items (Forms of dividends, processing time for
transfer of shares, receipt of Dividend/ECS intimations). The Cronbach’s alpha was 0.833

38
and Corrected Item-Total Correlation of each item is greater than 0.3 which demontrates
that the items form a scale that has reasonable internal consistency reliability.
MB has ensured shareholders' rights with a regular annual dividend payment policy,
an average dividend of around 14.4%. 100% of MB's shareholders reponsed that they have
been exercised the right of receiving dividends from the bank. Most of them expressed their
appreciation for MB's continuous dividend distribution over the years, even when the
economy was difficult. While many banks have not paid dividends in a long time, MB has
paid its efforts to ensure a minimum dividend rate of 10% per year.
Table IV-8- The dividend payout ratio of banks in Vietnam
The dividend payout ratio
Banks (paid for financial results of the previous year)
2015 2016 2017 2018 2019
6% in cash
MBB 6% in cash 6% in cash + 5% in shares 6% in cash
11,0% + 5% in shares + 5% in shares + 14% bonus share + 8% in shares
10.0% 8% in cash 8% in cash 8% in cash 8% in cash
VCB
(paid on 15/01/2020)
CTG Unpaid 7.0% in cash Unpaid Unpaid Unpaid
BID 8.5% 7.0% Unpaid 7.0% in cash 7.0% in cash
TCB Unpaid Unpaid Unpaid 200% in shares Unpaid
30.2% in shares
VPB
18.75% 31.84% in shares 31.25% in shares + 31.6% bonus share Unpaid
Source: Collected from disclosed information of banks in 2015,2016,2017,2018, 2019
As a listed bank, MB’s shareholders are free to transfer their shares in accordance
with the Law on Securities of Vietnam and MB’s Charter (Article 25 and 34). There are some
exceptions are mentioned in its Charter and other internal regulations such as: a) Individual
and institutional shareholders whose representatives are members of the BOD, members of
the SB, or the CEO of MB are not allowed to transfer their shares; b) The transfer of ESOP
shares is limited for at least 01 year or 2 years from the date of completion of the transaction
(subject to the Resolution of the AGM). Ensuring the right of transferring shares and its
stability, MB’s shares with high liquidity are preferred by investors and shareholders.
Table IV-9- Share price of MB and capitalization for the period 2015 - 2019
Items 2015 2016 2017 2018 2019
Share price (After adjustment) (VND) 10,450 10,520 20,900 18,930 20,800
Capitalization (VND billion) 23,360 23,978 46,113 42,021 48,374
Source: Report of the Board of Directors performance for term 2014 - 2019 and plan for the term 2019 - 2024 submitted to
the AGM of MB 2019; Collected from disclosed information of MB in 2019.

39
Ticker: MBB VN Avg Daily Vol: 5.62 million shares Foreign Owned: 20.9%
Price: VND 20,800 (31/01/2020) 52-Wk High: VND 23,500 Foreign Room: 0% (full room)
No of shares outstanding: 2,325.68 million 52-Wk Low: VND 18,700 Foreign Buy: 101 million shares (2016)
Market Cap: USD 2.13 billion 4-Yr change: +128.7% Foreign Room Lock: 9.1%

Figure IV-1- MBB Comparative Price Performance (adjusted) (01/2016-01/2020)

Source: MB’s IR pack Report 2019

4.2.5. The equitable treatment of shareholders (ET)

Table IV-10- Cronbach's Alpha (Equitable treatment- ET)
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
,878 ,881 3
Item Statistics
Mean Std. Deviation N
Voting methods applied in AGMs 1,81 ,870 397
The receipt of MB's general notice 1,74 ,787 397
The receipt of MB's annual reports 1,78 ,845 397

Item-Total Statistics
Scale Mean if Item Scale Variance Corrected Item- Cronbach's Alpha
Deleted if Item Deleted Total Correlation if Item Deleted
Voting methods applied in AGMs 3,51 2,503 ,646 ,935
The receipt of MB's general notice 3,58 2,380 ,841 ,764
The receipt of MB's annual reports 3,54 2,249 ,821 ,775

Source: SPSS data analysis

ET variable is computed by three items (Voting methods, receipt of general notice
and annual reports of MB). The Cronbach’s alpha was 0.878 and Corrected Item-Total

40
Correlation of each item is greater than 0.3 which demontrates that the items form a scale
that has reasonable internal consistency reliability.
Regarding the classification of shareholders by ownership, MB issues only common
shares (no preferred ones), so all MB shareholders have same rights. Regarding the classification
of shareholders by number of shares owned and/or percentage of share owned per Charter
Capital, there have been common terms "major shareholders" and "minority shareholders" in
Vietnam. Both of LOE and Law on Securities Vietnam take the threshold of 5% of the voting
shares/ total shares to identify major shareholders. Therefore, it can be understood that
shareholders whose percentage of share owned per charter capital of a company is less than 5%,
have less control and capacity to impose their wills on decisions of the company. These
shareholders can be identified as small or minority shareholders. To protect the interests of this
group of shareholders and strictly comply with related laws, MB gives minority shareholders
certain specific rights to form groups of shareholders which have a larger percentage of shares
owned than individuals’, and then this group can have certain influences the bank’s issues.
According to Article 34 of the MB's Charter, a shareholder or a group of shareholders
owning more than 9% of MB's total shares for a continuous period of at least six months has the
following additional rights: i) Request to convene the Meeting shareholders; (ii) View and receive
copies of the list of shareholders entitled to attend the AGMs; (iii) Nominate candidates to ellect as
members of the BOD and the SB of MB. This provides an opportunity for small shareholders to
set up groups to enhance the power of shareholders and to participate in corporate governance
(if have). In reality, Sai Gon New Port Corporation and Vietnam Helicoper Corporation set up a
group which owned more than 15% of MB’s total share to nominate two candidates and these
representatives were elected as members of the BOD of MB for term 2019 - 2024.
In addition, groups of minority shareholders can vote against the decision on division,
consolidation, merger, conversion of MB legal form of business regulated in MB's Charter, so
that they have the right to request MB to repurchase its shares (Article 24 MB’s Charter); or also
to sue at the Court or the Arbitration requesting the cancellation of the AGM’s resolutions if the
procedures for convening the AMG and making decisions, the content the decision violate the
provisions of the MB Charter or Laws (Article 43 and Article 46 MB’s Charter).

41
 Figure IV-2- MB’s Shareholder Structure on 31th December 2019
Source: MB’s IR pack Report 2019
According to the criteria of domestic or foreign shareholders and individual or institutional
ones, the number of MB's individual shareholders is high (2018, 2019 accounted for
approximate 99.20%/total number of shareholders), but their percentage of share owned per
Charter capital is only about 19.6% - 20.6%. Number of foreign shareholders (including
individuals and institutional) account for a low proportion of total number of shareholders (~ 0.5%)
and their percentage of share owned per Charter capital is ~ 20% (because MB limits foreign
shareholders’s percentage of share owned). To ensure the equitable treatment of shareholders,
MB has variety of channels to provide timely information at the same time in Vietnamese and
English; set up translating cabin at AGMs so that foreign shareholders can understand the
process and content of meetings. Foreign shareholders can participate in the Investor Relation
programs organized by MB and MB Securities Company quarterly or visit the Investor tab on
MB’s website to update information of MB’s performance, documents that MB disclosed.

42
 Table IV-11- Shareholders Structure of MB on 31th December 2019
31st December 2018 31st December 2019
% Share % Share
Number of Number of
No. Shareholders Number of owned per Number of owned per
shares shares
shareholders Charter shareholders Charter
owned owned
Capital Capital
I Institutional 359 1,714,303,810 79.35 371 1,859,291,978 78.36
1 Domestic shareholders in which: 228 1,284,410,757 59.45 234 1,386,103,969 58.42
1.1 Shareholders owned from 5% or more of Charter Capital 4 854,839,434 39.57 4 923,226,586 38.91
1.2 Shareholders owned less than 5% of Charter Capital 224 429,571,323 19.88 230 462,877,383 19.51
2 Foreign shareholders in which: 131 429,893,053 19.90 137 473,188,009 19.94
2.1 Shareholders owned from 5% or more of Charter Capital 0 0 0 0 0 0.00
2.2 Shareholders owned less than 5% of Charter Capital 131 429,893,053 19.90 137 473,188,009 19.94
II Individual 42,148 446,147,571 20.65 44,439 466,387,322 19.66
1 Domestic shareholders in which: 42,048 443,950,355 20.55 44,337 465,028,885 19.60
1.1 Shareholders owned from 5% or more of Charter Capital 0 0 0 0 0 0.00
1.2 Shareholders owned less than 5% of Charter Capital 42,048 443,950,355 20.55 44,337 465,028,885 19.60
2 Foreign shareholders in which: 100 2,197,216 0.10 102 1,358,437 0.06
2.1 Shareholders owned from 5% or more of Charter Capital 0 0 0 0 0 0.00
2.2 Shareholders owned less than 5% of Charter Capital 100 2,197,216 0.10 102 1,358,437 0.06
III Treasury shares 0 0 0 1 47,052,980 1.98
Total 42,507 2,160,451,381 100 44,811 2,372,732,280 100.00
As of December 31st, 2018, 2019, no state shareholders own shares in MB
Source: Collected from Report on Corporate Governance of MB in 2019

MB has well implemented the equitable treatment complying with the laws. However, according to OECD's recommendations,
MB has just only provided name and address of the department that handle shareholders requests (Shareholder Management Department
which is under MB’s BOD Office), but has not had a policy to resolve complaints/ grievances of shareholders yet. Moreover, after doing
pilot - tests, the researchers received following pinion from shareholders: The forms of voting that the bank offers are not diverse
(shareholders rise their voting cards to vote for approving or disapproving the issues at the AGMs), so that it might not be convienent
for shareholders who cannot attend the AGMs to exercise their voting rights.

43
4.2.6. The shareholder engagement (IR)
Table IV-12- Cronbach's Alpha (Shareholder Engagement- IR)
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
,919 ,921 3
Item Statistics
Mean Std. Deviation N
Quality of response of Investor Service 2,14 ,763 397
Speed of reponse of Investor Service 2,24 ,698 397
Accessibility of Investor Service 2,30 ,669 397
Item-Total Statistics
Scale Mean if Scale Variance if Corrected Item- Cronbach's Alpha
Item Deleted Item Deleted Total Correlation if Item Deleted
Quality of response of Investor Service 4,54 1,714 ,811 ,909
Speed of reponse of Investor Service 4,44 1,777 ,888 ,840
Accessibility of Investor Service 4,38 1,943 ,818 ,899

Source: SPSS data analysis

IR variable is computed by three items, the Cronbach’s alpha was 0.919 and Corrected
Item-Total Correlation of each item is greater than 0.3 which demontrates that the items form
a scale that has reasonable internal consistency reliability.
More than 95% the number of respondents answered that the quality of MB’s investor
service was satisfactory or better than that. However, about 3.5% - 4.5% the number of
shareholders who were surveyed suggested that MB mights to improve the response and the
accessibility of this sevice. There is an investor relationship team under Strategy Department -
BOD Office of MB. Howerver, there are only two people in this team being responsible for setting
up meetings investors and disclosing information. The bank typically engages with shareholders
during scheduled shareholder events (AGMs, analyst calls, public announcements, etc.). These
types of engagement seem to be mere formality and have little value in translating into positive
votes at the AGMs. Then, to enhance the voting rates at the AGMs, leaders of MB often spend
time on discussing with major and/or strategic shareholders about related and disclosed
information before the AGMs and other meetings that these shareholders attend.

4.3. SHAREHOLDER SATISFACTION IN CORPORATE GOVERNANCE AT MB

4.3.1. Regression Analysis of shareholder satisfaction at MB
This section attempted to measure the level of shareholder satisfaction in corporare
governance at MB via above evaluational factors.

44
Table IV-13- Cronbach's Alpha (Shareholder Satisfaction- SS)
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
,765 ,768 4
Item Statistics
Mean Std. Deviation N
Interested in Brand Reliability 1,52 ,544 397
Interested in Performance in recent years of MB 1,56 ,607 397
Interested in Transparent information disclosure 2,13 ,810 397
Interested in ensured rights and interests of shareholders 1,61 ,625 397
Item-Total Statistics
Scale Mean Scale Corrected Cronbach's
if Item Variance if Item-Total Alpha if Item
Deleted Item Deleted Correlation Deleted
Interested in Brand Reliability 5,30 2,924 ,427 ,774
Interested in Performance in recent years of MB 5,26 2,442 ,634 ,676
Interested in Transparent information disclosure 4,69 1,946 ,624 ,687
Interested in ensured rights and interests of shareholders 5,22 2,424 ,615 ,683

Source: SPSS data analysis

Shareholder Satisfaction (SS) variable is computed by mean of four items (Interested in
Brand Reliability, Interested in Performance in recent years of MB, Interested in Transparent
information disclosure, Interested in ensured rights and interests of shareholders). These four
items have high value of the alpha (0.765); the Corrected Item-Total Correlation of each item is
also achieved with values greater than 0.3, which indicates that the items form a scale that has
reasonable internal consistency reliability.
Bivariate Pearson Correlation and ANOVA in SPSS are used to analyse the correlations
between dependent variable (SS) with six independent variables (IA, AV, RD, ET, IR and BR).
As the results of Pearon Correlation and ANOVA analysises in Table IV-14, The value of
Pearson Correlation fluctuates in the range (-1) to 1, which indicates a correlation between the
factors; Sig of each variables <0.05 refers that they can be used to run the regression. ANOVA
Sig <0.05 identified that each of the independent variables had different contributions to the
dependent variable. Thus, regression models are meaningful.

45
Table IV-14- Correlations and ANOVA (Shareholder Satisfaction- SS)
Correlations
Information Rights of atteding and Receiving Equitable Investor Brand Reliability Shareholder
Accessibility voting at AGMs Dividends treatment relation Satisfaction
Pearson Correlation 1 ,502** ,865** ,918** ,722** ,476** ,593**
Information
Sig. (2-tailed) ,000 ,000 ,000 ,000 ,000 ,000
Accessibility
N 397 397 397 397 397 397 397
Pearson Correlation ,502** 1 ,597** ,590** ,307** ,270** ,320**
Rights of atteding and
Sig. (2-tailed) ,000 ,000 ,000 ,000 ,000 ,000
voting at AGMs
N 397 397 397 397 397 397 397
Pearson Correlation ,865** ,597** 1 ,864** ,628** ,434** ,556**
Receiving Dividends Sig. (2-tailed) ,000 ,000 ,000 ,000 ,000 ,000
N 397 397 397 397 397 397 397
Pearson Correlation ,918** ,590** ,864** 1 ,675** ,449** ,588**
Equitable treatment Sig. (2-tailed) ,000 ,000 ,000 ,000 ,000 ,000
N 397 397 397 397 397 397 397
Pearson Correlation ,722** ,307** ,628** ,675** 1 ,538** ,655**
Investor relation Sig. (2-tailed) ,000 ,000 ,000 ,000 ,000 ,000
N 397 397 397 397 397 397 397
Pearson Correlation ,476** ,270** ,434** ,449** ,538** 1 ,822**
Brand Reliability Sig. (2-tailed) ,000 ,000 ,000 ,000 ,000 ,000
N 397 397 397 397 397 397 397
Pearson Correlation ,593** ,320** ,556** ,588** ,655** ,822** 1
Shareholder
Sig. (2-tailed) ,000 ,000 ,000 ,000 ,000 ,000
Satisfaction
N 397 397 397 397 397 397 397
**. Correlation is significant at the 0.01 level (2-tailed).
ANOVAa

Model Sum of Squares df Mean Square F Sig.

Regression 75,092 6 12,515 201,515 ,000b
1 Residual 24,221 390 ,062
Total 99,313 396

a. Dependent Variable: SatisfactionShareholder

b. Predictors: (Constant), ReliabilityBrand , Rights of atteding and voting at AGMs, Investor relation, Receiving Dividends, Equitable
treatment, Information Accessibility
Source: SPSS data analysis

46
Table IV-15- Model Summary
Model Summaryb

Model R R Square Adjusted R Square Std. Error of the Estimate Durbin-Watson

1 ,870a ,756 ,752 ,24921 1,357

a. Predictors: (Constant), ReliabilityBrand , Rights of atteding and voting at AGMs, Investor relation,
Receiving Dividends, Equitable treatment, Information Accessibility
b. Dependent Variable: SatisfactionShareholder Source: SPSS data analysis

As the table above, Adjusted R Square = 0.752 means that the independent variables in
the regression affect 75.2% of the change of the dependent variable, the remaining 24.8% is
due to other variables out of model and random error.
Table IV-16- Coefficients
Coefficientsa
Model Unstandardized Standardized t Sig. Collinearity Statistics
Coefficients Coefficients
B Std. Error Beta Tolerance VIF
(Constant) ,206 ,057 3,637 ,000
Information Accessibility -,065 ,049 -,097 -1,335 ,183 ,118 8,497
Rights of atteding and voting at AGMs -,037 ,037 -,033 -,997 ,319 ,581 1,720
1 Receiving Dividends ,061 ,046 ,074 1,334 ,183 ,204 4,914
Equitable treatment ,138 ,047 ,206 2,924 ,004 ,126 7,955
Investor relation ,155 ,029 ,204 5,296 ,000 ,422 2,372
ReliabilityBrand ,319 ,015 ,643 21,361 ,000 ,691 1,448
a. Dependent Variable: SatisfactionShareholder
Source: SPSS data analysis

The table IV-17 above shows that the IA, AV and RD factors have the t-values sig >0.05,
so these variables have no effect on the dependent variable. The remaining independent
variables (ET, IR, and BR) which have t-values sig < 0.05 are significant in the regression
model. Therefore, Regression equation after removing unsignificant factors is:
SS= 0.206 + 0.138ET + 0.155IR + 0.319BR
This means that shareholder satisfaction with MB’s corporate governance has been affected
by 13.8 % Equitable Treatment, 15.5% Shareholder Engagement, 31.9% Brand Reliability. Based
on this result, Brand Reliability is factor which is most influential to shareholder satisfaction. After
discussing with senior managers, colleagues at MB, the researcher found out that attending and
voting at AGMs, receiving dividends and information are basic rights of shareholders, so
companies must to ensure these rights to comply with laws. MB has been implementing good
practices for these rights, and shareholders of the bank have higher expectations in Equitable
Treatment, Shareholder Engagement and Brand Reliability.

4.3.2. Shareholders’ Gender and satisfaction in corporate governance

47
 Table IV-17- ANOVA
(Shareholderes’gender)
SatisfactionShareholder Mean of satisfaction
Sum of df Mean F Sig. 1,77
1,8 1,7065
Squares Square 1,7 1,6125
Between Groups 2,371 1 2,371 9,660 ,002
1,6
Within Groups 96,942 395 ,245
1,5
Total 99,313 396 Male Female Total
Source: SPSS data analysis

Sig = 0.005 (<0.05) proves that there is a Figure IV-3- Shareholder

satisfaction among gender groups
difference in satisfaction in corporate governance at MB
among different gender groups of shareholders. Satisfaction of male shareholder is over 1.7/5
while the satisfacton of female about the bank’s corporate governance is ~ 1.6/5. These results
show that female shareholders are more demanding and this group accounts for 40.3% of
surveyed respondents.

4.3.3. Shareholders’ age and satisfaction in corporate governance

Table IV-18- ANOVA (Shareholders’ age)
SatisfactionShareholder
Sum of Squares df Mean Square F Sig.
Between Groups ,615 2 ,308 1,228 ,294
Within Groups 98,698 394 ,251
Total 99,313 396 Source: SPSS data analysis
Sig = 0.294 (>0.05) proves that there are little differences in satisfaction in corporate
governance at MB among different age groups of shareholders.

4.3.4. Shareholders’ nationality and satisfaction in corporate governance

Table IV-19- ANOVA (Shareholders’ nationality)
SatisfactionShareholder Mean of satisfaction
Sum of df Mean F Sig. 2,5691
4 1,5907 1,7065
Squares Square
2
Between Groups 39,668 1 39,668 262,701 ,000 0
Within Groups 59,645 395 ,151 Vietnamese Other Total
Total 99,313 396 nationalities

Source: SPSS data analysis

Figure IV-4- Shareholder
Sig = 0.005 (<0.05) proves that there is a satisfaction among nationality groups
difference in satisfaction in corporate governance at MB
among different nationality groups of shareholders. Vietnamese shareholders group (accounts for
88.2% of the surveyed respondents) tends to have higher expectation of corporate governance of
the bank than the foreign group does. The satisfaction of Vietnamese is over 1.59/5 while the
satisfacton of foreigners is over 2.56/5. This can be explained that shareholders in Vietnam have
more improved understanding in corporate governance and the shareholders that have long time
of being with MB are almost Vietnames. They tend to compare the practices in governance

48
among the corporates they own shares while foreign shareholders seem to more expect of short -
term effectiveness of their investment.

4.3.5. Time is MB’s shareholder and satisfaction in corporate governance

Table IV-20- ANOVA (Time being MB’s shareholder) Mean of satisfation
Shareholder Satisfaction
Sum of df Mean F Sig. over 15 years 1,5521
Squares Square from 5 - 15 years 1,6786
Between Groups 4,284 3 1,428 5,905 ,001 from 1 - 5 years 1,63
less than 1 year 1,8463
Within Groups 95,029 393 ,242
Total 99,313 396
1,4 1,6 1,8 2
Source: SPSS data analysis
Sig = 0.005 (<0.05) proves that there is a Figure IV-5- Shareholder
satisafaction among groups of time
difference in satisfaction in corporate governance at
MB among different groups of time being MB’s shareholder. Satisfaction of shareholders who
have been with the bank less than 1 year (accounts for 34% of the surveyed respondents) is over
1.8/5. The satisfacton rate of who have been MB’s shareholders from 1 year and less than 15
years is over 1.6/5 whille the satisfaction of who have been with the bank over 15 years (accounts
for 6% of the surveyed respondents) is ~ 1.55/5. It shows that the longer time of being MB’s
shareholders, the more demand they want from the bank’s corporate governance. This trend
likely has correlation with findings of of Julija Bistrova, Jelena Titko and Natalja Lace of Riga
Technical; Latvia30 which showed that high quality corporate governance is being recognized by
shareholders and is gaining importance if the investment horizon is relatively long.

4.4. GAPS IN CORPORATE GOVERNANCE OF MB AND ADVANCED PRACTICES

4.4.1. Comparison between corporate governance at MB and other banks in Vietnam
The researcher studied corporate governance at other five big commercial banks in
Vietnam to examine differences in MB’s practices with others.

30
Julija Bistrova, Jelena Titko, Natalja Lace (2014) SUSTAINABLE SHAREHOLDER VALUE: ANALYSIS OF VALUE DRIVERS;
Riga Technical University, Latvia, http://dx.doi.org/10.5755/j01.em.19.2.3601.

49
 Table IV-21- Corporate governance at MB and other banks in Vietnam

- 14.4% VIETTEL
- 9.6% SCIC
- 74.8% State
- 7.6% Vietnam
owned - 64.46% State
Shareholder Helicopter - 80.99% State owned
- 15% Mizuho owned
structure Corporation - 15% KEB Hana -99.47% domestic
Banks - 19.73% MUFG - 77.49% domestic
(%/total - 7.3% Saigon New - 3% other foreigners shareholders
- 8.06% foreigners Bank, Ltd - 22.51% foreigners
charter Port - 1.01% other domestic -0.53% foreigners
- 2.14% other - 15.81% other
capital) - 36.1% other shareholders
domestic shareholders
domestic
shareholders
shareholders
- 20% foreigners
- BOD with 8 members,
- BOD with 11
- BOD with 9 including 1 independent
members, including - BOD with 8 - BOD with 10 members,
members, including member (also member of - BOD with 5
1 independent members, including 1 including 1 independent
1 independent Risk Management members, including
member (also independent member member (also member of
member (also Committee) 1 independent
member of Risk (also member of Risk Risk Management
member of Risk + All members are male member (also
Management Management Committee, Strategy and
Management + 2 members are member of Risk
Committee) Committee) organization committee)
Committee) foreigners Management
+ 4 female and 7 + 2 female and 6 + 2 female and 8 male
+ All members are - 6 Committees under Committee)
male members male members members
Governance male BOD: + All members are
+ All members are + 2 members are + 1 member is foreigner
structure + 1 member is + Board Risk Committee female and
Vietnamese foreigners - 4 Committees under BOD:
foreigner + Board Risk Settlement Vietnamese.
- 3 Committees - 3 Committees under + Risk Management
- 2 Committees Committee - 2 Committees
under BOD: BOD: Committee
under BOD: + Board Nomination under BOD:
+ BOD Standing + Risk Management + Human Resource
+ Risk Committee + Risk Management
Committee Committee, Committee
Management + Board Audit Committee Committee
+ Risk Management + Personnel + Strategy and organization
Committee + Board Remuneration + Human Resource
Committee Committee committee
+ Human Resource Committee Committee
+ Human Resource + Policy Committee + IT committee
Committee + Board Strategy
Committee
Committee

50
 - IR Team, which is - IR Team, which is a - IR -Manager, BOD - Apply “Customer centric - BOD Office is
a function unit -Direct function unit under Secretariat is responsible for model” with Shareholder responsible for the
under the BOD conversations at the BOD Secretariat updating information regular is one of three main communication with
office, is the Head Office, is responsible for the through IR website, direct objects. investors and
responsible for the attendance at communication and phone, email monthly or when - Outstanding activities: information
communication with domestic and information sharing incurred and meeting up with + Update information disclosure.
investors and foreign investment from investor the analysts monthly, after about bank performance
information conferences community to CTG quarterly financial figures. and strategy frequently.
Shareholder
disclosure. BOD - Invited PwC (Vietnam) to + Press conferences
Engagement
review, assess and consult quarterly since 2017;
on corporate governance to + Investor and analyst
help BIDV apply practices of presentation quarterly
information disclosure and since July 2018.
transparency, equal
treatment, shareholder rights
protection, etc. aligned with
international standards.
Authorized Vice Chairman cum Deputy CEO Phung Legal Representative Senior executive vice Director of Accounting, CEO Nguyen Duc
person to CEO Luu Trung Nguyen Hai Yen - Chairman Le Duc president Quach Hung Hiep Financial Policy and Tax Vinh
Disclosed Thai Tho Thai Ha Linh
Information

Source: website and reports on corporate governance of banks 2019

In common, six banks which are studied comply with laws in terms of the minimum number of independent member (1
member), must - have committees (Risk management and Human resource committees) and appointing authorized person to
disclosed information. While other banks have foreign members in their boards, MB has not. BIDV showed its efforts to improve
shareholder engagement through consulting by third party, Techcombank set up shareholder engagement as a part of its
“Customer centric” strategy.

51
 According to HSX and IFC assessments for MB in 2019, some factors of corporate
governance which might impact on shareholder satisfaction (Rights of shareholders, Disclosure
and Transparency) are at higher level than the medium of banking industry (Total score of MB is
60%. Score for rights of shareholders of MB is 64%, for relationship of related parties is 80%, for
disclosure and transparency is 42% and Responsibilities of the Board and Supervisors is 54%).

Rights of
Shareholders Score of Coporate
Governance in 2019
MBB
60%
Average of
banking industry 47%
42%
Average of
VN100

Relationship of
Responsibilities Related Parties
of the board and
supervisors MBB Average of Average of
industry VN 100
Disclosure and
Transparency

Figure IV-6- The assessments on MB’s corporate governance in 2019

Source: The assessments of HSX and IFC on MB’s corporate governance in 2019
However, HSX and IFC suggested that the bank needs to improve the Disclosure
information and Transparency in corporate governance by the appropriate remuneration
announcements of each member of the Board, increase the number of independent members in
the Board and the participation of the independent members in committees.

4.4.3. Comparison between corporate governance in MB and advanced practices

The current structure of MB (as the following figure) is similar to the two-tier structure in
Decree 71 with AMGs, BOD and SB, the internal audit office supports the SB. The BOD
strengthened the organization and activity of subordinate Committees (Risk Management
Committee, Senior Management Committee, Human Resource Committee), assigned
members to join committees based on their strengths, experience, meeting legal and internal
requirements31.

31
MILITARY COMMERICAL JOINT STOCK BANK (2019) REPORT OF THE BOARD OF DIRECTORS OF MILITARY COMMERICAL
JOINT STOCK BANK, Re : Performance result of 2018 and action plan for 2019.

52
 i. MB’s Organization and Governance Structure:

GENERAL MEETING OF
SHAREHOLDERS

BOD OFFICE

INTERNAL AUDIT SUPERVISORY BOARD BOARD OF DIRECTORS

OFFICE

INVESTMENT DIVISION

1.HUMAN RESOURCE COMMITTEE

2.RISK MANAGEMENT COMMITTEE CEO
3.SENIOR MANAGEMENT COMMITTEE

1. MBAMC ALCO COMMITTEE PMO OFFICE 4. MIC

2. MBS 5.MCREDIT
3. MBCAPITAL 6. MBLIFE
HUMAN RESOURCE DIVISION CEO OFFICE

INTERNAL INSPECTION AND RISK MANAGEMENT DIVISION

CONTROL DIVISION

FINANCE AND ACCOUNTING NETWORK AND QUALITY

DIVISION MANAGEMENT DIVISION

LEGAL DEPARTMENT ADMINISTRATIVE DIVISION

LARGE PERSONAL TREASURY STRATEGIC DIGITAL BANKING OPERATION APPRAISAL AND

CORPORATE SME DIVISION FINANCIAL DIVISION DIVISION DIVISION IT DIVISION APPROVAL DIVISION
CUSTOMERS
DIVISION SERVICE DIVISION DEPARTMENT

FOREIGN BRANCHES /
REPRESENTATIVE OFFICES

MULTI-FUNCTION COMMUNITY
BRANCHES BRANCHES
Figure IV-7- MB’s Organization Structure
Source: collected from MB’s Annual Report 2018 and MB’s Report on Corporate Governance 2019

The detail information about the member of MB’s BOD as below:

53
 Table IV-22- The information of MB’s BOD
Day becoming/no Number of Percentage Reasons
Represent
No. Member of BOD Gender Position longer member of meetings of meetings for Note
for
the BOD attendance attendance absence
I Term 2014-2019
Being responsible for all activities of
the BOD in general. Member of
Day becoming BOD Standing Committee, HR
1 Chairman
Lê Hữu Đức Male member of the 22/22 100% Committee, Risk Management
of BOD Board: 23.04.2014
Council, Emulation Council of the
BOD level
Lưu Trung Thái Member of BOD Standing
Vice Day becoming
2 (Authorized person Committee, and other Committees,
Male Chairman member of the 24/24 100%
to disclose Risk Management Council,
cum CEO Board: 23.04.2014
information) Emulation Council of the BOD level

Member of BOD Standing

No longer member
3 Vice Committee, and Member of other
Lê Công Male of the Board 24/24 100%
Chairman Committees, Risk Management
27.04.2019
Council
Member of BOD Standing
Committee, Risk Management
Day becoming
4 Committee, Human Resource, HR
Nguyễn Thị Ngọc Female Member member of the 24/24 100%
Committee; Risk Management
Board: 23.04.2014
Council, Emulation Council of the
BOD level
Member of BOD Standing
Day becoming Committee, Risk Management
5 Nguyễn Thị Thủy Female Member member of the 24/24 100% Committee, HR Committee; Risk
Board: 23.04.2014 Management Council, Emulation
Council of the BOD level
Vietnam No longer member
6 Hà Tiến Dũng Male Member Helicopter of the Board 9/9 100%
Corporation 27.04.2019
Nguyễn Văn No longer member
28
7 Male Member of the Board 9/9 100%
Hùng Corporation
27.04.2019
Nguyễn Đăng Saigon No longer member
8 Male Member Newport of the Board 9/9 100%
Nghiêm 27.04.2019
Corporation

54
 Day becoming/no Number of Percentage Reasons
Represent
No. Member of BOD Gender Position longer member of meetings of meetings for Note
for
the BOD attendance attendance absence
No longer member
Nguyễn Văn Huệ Independent Member of Risk Management
9 Male of the Board 11/11 100%
Member Committee
27.04.2019
State
Nguyễn Chí Capital No longer member
10 Male Member Investment of the Board 8/8 100%
Thành Corporation 22.04.2019
(SCIC)

II Term 2019-2024
Being responsible for all activities of
the BOD in general. Member of BOD
23.04.2014 Standing Committee (till 24.05.2019).
1 Lê Hữu Đức Chairman Chairman of Senior Management
Male Reappointed on 18/18 100%
of BOD Committee (from 24.05.2019), HR
27/04/2019
Committee, Risk Management
Council, Emulation Council of the
BOD level
Member of BOD Standing Committee
Lưu Trung Thái Occupied
Vice 23.04.2014 (till 24.05.2019); Member of other
2 (Authorized person with
Male Chairman Reappointed on 22/24 91.67% Committees, Risk Management
to disclose other
cum CEO 27/04/2019 Council, Emulation Council of the
information) work
BOD level
Military
Industry - Occupied
Member of Senior Management
3 Đỗ Minh Phương Vice Telecommun Becoming BOD with
Male ications
11/15 73.33% Committee (from 24.05.2019), HR
Chairman member: 27.04.2019 other
Group Committee;
work
(Viettel)
Member of Senior Management
Committee (from 24.05.2019), HR
Vũ Thị Hải Committee; Risk Management
4 Vice Becoming BOD Council, Emulation Council of the
Female 26/26 100%
Phượng Chairwoman member: 27.04.2019
Board. Chairman of Risk
Management Committee (since
24.05.2019)

23.04.2014 Occupied Member of BOD Standing

5 Nguyễn Thị Ngọc with Committee, Senior Management
Female Member Reappointed on 25/26 96.15%
other Committee (from 24.05.2019), Risk
27/04/2019
work Management Committee, HR

55
 Day becoming/no Number of Percentage Reasons
Represent
No. Member of BOD Gender Position longer member of meetings of meetings for Note
for
the BOD attendance attendance absence
Committee; Risk Management
Council, Emulation Council of the
BOD level
Member of BOD Standing Committee,
23.04.2014 Senior Management Committee (from
Occupied 24.05.2019), Risk Management
6 Nguyễn Thị Thủy Female Member Reappointed on 23/26 88.46% with Committee, HR Committee; Risk
27/04/2019 other Management Council, Emulation
work Council of the BOD level
Member of Senior Management
Committee (from 24.05.2019), Risk
7 Lê Viết Hải Becoming BOD Management Committee, HR
Male Member 26/26 100%
member: 27.04.2019 Committee; Risk Management
Council, Emulation Council of the
BOD level
Vietnam
Kiều Đặng Hùng Becoming BOD
8 Male Member Helicopter 5/5 100%
member: 27.04.2019
Corporation
Saigon
Ngô Minh Thuấn Becoming BOD
9 Male Member Newport 5/5 100%
member: 27.04.2019
Corporation
State Capital
Vũ Thái Huyền Investment Becoming BOD
10 Female Member 5/5 100%
Corporation member: 27.04.2019
(SCIC)
Male Independent Becoming BOD Member of Risk Management
11 Trần Trung Tín 11/11 100%
Member member: 27.04.2019 Committee
Source: collected from MB’s Report on Corporate Governance 2019

According to the Law on Credit Institutions of Vietnam, the minimum number of members of the BOD is 7 and a maximum of 11
people. It also requires at least 01 independent member and at least half of the total number of members who are independent members
and members who are not executive in the BOD. MB's BOD has 11 members, including 5 executive members, 6 members with 1
independent one who are non-executive members; then the bank ensures a relatively suitable scale, the executive/ non-executive
structure and the number of independent members complying with Law on Credit Institutions that is specialized law in banking system.

56
 According to the IFC, the number of independent directors is required at least 50% of
the total number of members of the BOD. In Decree 71, large-scale listed companies must
have at least one-third of the members of the BOD are independent. Thus, with the number of
BOD members at 11, MB needs at least 3 independent members rather than only one
currently. Moreover, according to the OECD Principles and Decree 71, the independent
members must be appointed as Chairman of Human Resource and Remuneration
Committee, MB has not met this requirement.
According to the advanced practices in corporate governance, the BOD needs to
have variety knowledge, competency and a diversity of experiences to ensure efficient
discussions within the Board. In addition, the Basel Committee determined that a BOD of a
bank needs experience in finance, accounting, credit, banking operations, payment systems,
strategic planning, communication, governance, risk management, internal control, banking
regulations, audits and compliance with laws. The current structure of MB's BOD ensures the
requirements for diversity of knowledge and experience mentioned above. The quality of
governance of the bank is of high standards by inheriting multi-industrymanagement
experience from full-time Board members who are managers of MB from the early days of
establishment, and from BOD members who are the senior managers, chairman, CEO of
leading enterprises such as Military Industry - Telecommunications Group (Viettel), State
Capital Investment Corporation (SCIC), Saigon Newport Corporation, Vietnam Helicopter
Corporation. However, representatives of major shareholders are part - time members;
therefore, they have not participated in activities of the bank frequently and MB has not gained a
lot of benefits from these members.

57
 CHAPTER V: CONCLUSION AND RECOMMENDATION
5.1. DISCUSSION OF FINDINGS
5.1.1. Demographic Variables and Shareholder satisfaction
As findings in Chapter IV, MB’s shareholders regardless of their ages are equally
treated by the bank’s corporate governance. In contrast, there are some differences in
satisfaction for MB among different groups in terms of gender, nationality and time of being
MB’s shareholders. MB should put more attention on female, domestic groups of
shareholders and shareholders who have been with MB for long time (over 5 years) to
improve the level of satisfaction of shareholders.

5.1.2. Regression model of shareholder satisfaction

The regression equation of shareholder satisfaction is derived as “SS= 0.206 +
0.138ET + 0.155IR + 0.319BR”. This demonstrates that among three factors of corporate
governance, Brand Reliability is the most important one that contributes more than 31% to the
satisfaction of shareholders with the bank. Therefore, MB should aim to enhance its brand value
to satisfy shareholders at an increasingly high level. Moreover, if MB can improve two others
(ET, IR), it will be able to gain one - third of success to satisfy shareholders. After serious cases
of Eximbank, Oceanbank, Construction Bank of Vietnam, etc. recently, shareholders might have
gradually lost confidence in the safety of banks, so that brand reliability is the most important
factor for them to select a bank to ensure the effectiveness and security of their investment.
Moreover, which can make MB be different or even better in satisfying shareholders are
implememtations of its’ equitable treatment for shareholders and shareholder engagement.
These factors should be mapped into the bank’s strategy.

5.2. DIRECTION FOR DEVELOPMENT OF MB IN PERIOD OF 2017 - 2021

Corporate governance improvement is a matter of constant process which includes

specific timelines for attaining specific milestones in overall governance policies and practices.
This timeline of MB’s governance reforms with three phases as below illustrates the development
of governance improvements over time. Some steps may only be achievable once previous
actions are settled and a new horizon is in place favoring a new set of improvements (for
example, changing the size and composition of the board to include independent members).

58
 Phase 1 Phase 2 Phase 3
•04/11/1994: establishment •2010: Signed Strategy Advisory •2013: Change in Board size
of the bank Service Contract with McKinsey and composition with an
to build up Strategy of MB for independent member joining
•2007: strategic partnership period of 2010 - 2016 the Board. The independent
with VCB
member joins the Risk
•2011: Became a listed company Management committee
•2008: strategic partnership in HCM Stock Exchange
with Viettel.
•2016: strategic partnership
•2012: Established committees with SCIC, representative of
of the Board (Human Resource SCIC joins the Board of MB.
committee, Risk Management
committee, Credit committee)
•2017: Built up Strategy of MB
for period of 2017 - 2021
Figure V-1- MB’s Corporate Governance Implementation Process
Source: Collected from internal information of MB
Strategy for the 2017 - 2021 phase
i. Strategic vision: “To be the most convenient bank”
ii. Strategic objectives: “Top 5 commercial banks on business efficiency and safety”.
iii. Strategic motto: “Innovation, Modernization, Cooperation, Sustainable Development”.
iv. MB develops based on 03 strategic pillars, including Community based Bank,
Professional Bank, Digital Banking and 2 strategic platforms, namely Excellent Risk
Management, Fast Execution Competence; Four key transition points are Digital Bank,
Customer Relationship Strengthening, Risk Management Enhancement, and Efficient
Management of Member Companies; Synchronous implementation of 4 groups of solution
are: Corporate Governance, Business Performance, Technology, and Human Resources.
To achieve the above-mentioned strategic objectives and strategic transition points, the
bank plans to continuosly promote the core values that tied to high determination with the motto
"discipline - law respect - efficiency - safety" to develop MB corporate culture, helping MB to
become a competitive advantage in the market. Improving the quality of corporate governance
plays an important role in the Development Strategy for the period 2017-2021. According to the
assessments of some reputed institutions, the corporate governance of MB is at higher level
than the medium of banking industry in Vietnam but there are some aspects these institutions
suggest for the bank’s improvement such as:
- Developing a Shareholder Engagement strategy linked to the overall Development
Strategy of the Bank and aimed to shareholders’ values (Stabilizing shareholder structure in
which controlling shareholders are military enterprises to ensure sustainable development.

59
Searching the qualified strategic partners who will help MB to increase competitiveness will
be put in priority, including opening room for them).
- Enhancing the roles and responsibilities of the BOD and the SB to meet new
requirements for developments with scope of Financial Group. In particular, the BOD needs a
variety of experience, structure, knowledge on corporate governance.
- Improving transparency and completing policies, internal document system of MB on
corporate governance complying with the provisions of the laws and advanced practices.
- Applying modern technology to ensure and exercise the rights of shareholders (access
information of the bank, vote and give opinions for the bank).
- Developing an effective force to implement investor relations activities, information disclosure.
5.3. RECOMMENDATIONS
5.3.1. Solutions in developing an effective shareholder engagement strategy:
According to a research of Tarun Mehta, Advisor, ISS Corporate Services in 2013,
more frequent communication leads to a better understanding of the company and higher
comfort level of shareholders, particularly on sensitive issues. Shareholder engagement
may not always garner immediate results, it has the potential to lead to mutual agreements
on various matters over time. Three following factors are indicated as most critical behind
successful shareholder engagement, so that MB needs to study when developing an
effective strategy for shareholders relation:

- How often does the bank engage with

shareholders?
- Is the current process reactive or
Frequency proactive?
-What are shareholders’ preferences?

- What communication channels

are being used?
- Who is conducting the Design Method - What channel serves the bank
engagement efforts?
- What are the topics of discussion? best?
- Is the message consistent? - What is the best practice?

Figure V-2- Three factors are the hallmark of a successful shareholder engagement program
Source: Tarun Mehta, Advisor, ISS Corporate Services (2013) 'Shareholder Engagement: Maximizing the Shareholder Relationship',
Executive Compensation Insights, 13.3, pp. 1 [Online]. Available at:
https://www.issgovernance.com/file/publications/MaximizingTheShareholderRelationshipVol_13.3.pdf (Accessed: 18 th February 2020).

The bank should establish an authority policy on conducting the engagement efforts that
denpends on the issues at hand. IR team should be incharge of getting intouch and setting up
meetings with shareholders; people at higher levels will communicate and engage with them.

60
For example, it will be better to have Management, particularly the CEO, whose intimate
knowledge of strategic issues and familiarity with daily operations, meet and share with
shareholders topics of strategy, performance. On issues regarding executive compensation,
shareholder rights and other corporate governance matters, specific Board members, such
as the Lead Director, Chairman, or Chairs of certain committees, would be best positioned
to engage with shareholders.
Among many methods and approaches to work with its shareholders, the bank can
distribute its effort into communication approaches/categories denpending on shareholder base
(such as: annual meetings, analyst conferences, investor day, roadshows, virtual meetings or
even an official shareholder survey). With the history of high shareholder support on management
proposals, evaluating all these factors, the bank can use a combination of methods above to
maintain strong ties with shareholders.

5.3.2. Solutions in governance structure:

To improve not only external
transparency, but also the quality of
the board accountability, coporate
reform in the world has been to
establish and increase the
independence and powers of non -
executive directors and a range of
board committees which are
composed of non - executives. The
key requirements for more effective
corporate governance as set out in
the Combined Code of the UK are to
establish closer links with
shareholders, to introduce more
transparent appointment procedures,
to extend training and development of
directors and to implement review of
boar performance. The researcher
recommends the transformation Figure V-3- The transformation from management control to
independent boards
Source: Taylor, Bernard (2004), Leading the Boardroom Revolution, Corporate
Governance: An International Review; 12 (4): 423.
61
of power from the formerly management control to a board exercising real independence
and authority as the following Firgure V-3 to apply appropriately in MB. There are some main
suggestions in details for implementing this transformation in the bank as bellows:

i. The membership of the independent person in the BOD:

The participation of independent members in the board is to objectify its work, to
provide care to the board in the first instance of the fortunes of the company, as well as a
balance between the interests of the dominant shareholders and minority shareholders.
Therefore, good practices suggest a board structure with high number of independent
memebers. The Polish good practice recommends that at least two members of the SB
meet the criteria of independence while the British one requires at least 50% of the Directors
are independent members32. As mentioned in 4.4.3, according to the International Finance
Corporation (IFC) and Decree 71, with the number of BOD members at 11, MB needs at least
3 independent members rather than only one currently.

ii. Setting up the remuneration committee:

MB's BOD established Human Resource Committee to give the BOD advice on matters
related to senior human resource management, emulation and commendation, and human
policies including remuneration. Therefore, the Human Resources Committee has been
implementing some functions of the Remuneration Committee. This committee is directly headed
by the Chairman of the board. To fully implement functions of a remuneration committee
complying with related law (Decree 71), enhance the role and participation of independent
according to good practices on corporate governance, MB should set up the remuneration
committee and its independent member should be appointed as Chairnam of this committee.

5.3.3. Solutions in implementing the equitable treatment of shareholders

There are some solutions that MB can apply to improve the equitable treatment of
shareholders as bellows:
- MB needs to strengthen internal regulations/policies and set up a process to handle
complaints and grievances of shareholders; related documents should be public on MB’s
website. The BOD needs to appoint one member to be incharge of handling complaints and
grievances of shareholders as well as publish on the website the periodical reports on
results of settlement to ensure transparency.

32Monika Marcinkowska (2012) CORPORATE GOVERNANCE IN BANKS: PROBLEMS AND REMEDIES*, Poland: University of
Lodz, Finance, Banking and Insurance Institute .

62
- It would be necessary to open the room of foreign ownership of MB’s shares to reach
the threshold of 30% as required by Vietnam laws. MB is setting the limit of 20% for foreign
owned share and keeping the room 10% of MB's total shares to seek foreign strategic
shareholders according to the criteria that the AGM has approved. However, keeping this
room for too long will partly affect the equitable treatment between foreign and domestic
shareholders as well as MB’s share price.
- The bank should continue to review and strictly implement regulations regarding to internal
trading, abuse of personal interests, and disclosure of benefits that Board members and
managers can get from transactions related to MB. The SB, accordingly, should enhance their
role in supervising the compliance of this matter.
- Improving voting methods is another solution to help shareholders regardless of the size of
their holding exercise their voting rights better. MB can deploy more advanced voting forms, such
as remote voting, voting online so that foreign shareholders and shareholders in other locations
can exercise their voting rights and participate in the bank’s important decesions. To implement
this change, the bank needs to invest in IT systems and supporting infrastructure, set up
appropriate procedures; moreover, it also needs legal guidance from the state agencies to ensure
these methods are complied with laws and toward good practices.

5.3.4. Solutions in implementing Disclosure and Transparency

To improve the implementation of Disclosure and Transparency as recommendations of
IFC and HSX, MB needs to enhance some specific activities as follows:
- MB needs to disclose information of remuneration of members of the BOD, the SB, and
Managers. It requires the BOD to carefully aware of the importance, benefits of this activity to
accept changes and be the pioneer in this industry in Vietnam.
- MB needs to disclose information about the training programs that the BOD has participated
in the year. The Chairman should set up a specific set of KPIs for learning and self-learning so
that the members are willing to cultivate and update knowlegde.
- The bank should review and enhance internal regulations and guidances on information
disclosure including: organizational structure, business and operation processes; functions and
duties of related divisions, authorization and empowerment to identify personal responsibilities
associated with the quality of implementing Disclosure and Transparency.
- The BOD should appoint a member to be in charge of corporate governance (instead of
Head of BOD Office) and the imformation disclosure to enhance its commitments and
engagement with shareholders.

63
- At the AGMs, it is necessary to invite an independent party to supervise the results from
counting votes. Applying electronic statistics forms to update the voting results of each issue on
screens at the AGMs can help shareholders follow and improve the transparency.

5.3.5. Solutions in implementing the responsibilities of the board

The BOD members are elected by shareholders in AGMs, and can be regular
representatives of the shareholders in the banks’s governance and management. Legally,
the board is ultimately resposible to the shareholders for the activities and results of the
bank, for maintenance of stability and financial soundness. Then, how the BOD implements
their responsibilities directly affect shareholders’ benefits and satisfaction.
The authorities and responsibilities of the board are specified in laws and the Charter of
the bank. The core compenteces of the BOD forming the foundations of the bank activities
include: approving and overseeing the strategic objectives of the bank; overseeing the work of the
management board, the determination of the scope of the obligations and liability of the
management members; the establishment of guidelines for the acceptable level of risk;
overseeing the introduction of the management system (consisting at least of the system of risk
management and internal control system); assessment of the adequacy and effectiveness of the
system. Pursuant to study MB’s real practices, to help the BOD implement their responsibilities
efficiently, the researcher suggests some solutions as bellows:

i. Constant learning for leaders:

There are a number of requirements for members of the BOD of a bank. According to
Basel Committee on Banking Supervision (2006), an absolute requirement is that they have
high qualifications, clearly understand their role in the governance and supervision of the bank
and are able to assess the matter in a balanaced manner. It is necessary to ensure that the
members of the BOD have great professionalism in their functioning (adequate direction of
knowledge, skills, commitment, and experience) and constantly upgrade their skills.
According to the minimum standards of Laws, good practices in criteria for the BOD, MB
can itselt set up appropriate standards for its BOD’s members (certificates, experiences, etc.),
and then develop training programs/plans for its directors. These development plans should be
consulted by shareholders at AGMs or other forms, so that the shareholders can give
participate in ensuring implementation of responsibilities of the Board.

64
 Figure V-4- The learning board model.
Source: Garratt, Bob (2003), The Learning Board, Henley International Corporate Governanc. Henley Management College.

ii. The BOD’s engagement for performing their tasks and duties:
As a requirement to perform the members’ duties, they must be able to spend enough
time performing their tasks (which is not limited to participation in the meetings of the BOD and
its committees). Representatives of major shareholders are part - time members of MB’s BOD;
therefore, they have not participated in activities of the bank frequently and MB has not gained a
lot of benefits from the experience of these members.
Therefore, it is important that members of MB’s BOD should perform their tasks and
duties with offical engagement (in document such as “Task assignment in the BOD”), but it is
not recommended that they take part in operational management of the bank. It is also
necessary to keep formal rigorous assessments of the board and its members (the bank can
set up KPIs for the BOD members to assign tasks and assess each member’s performance) to
ensure that the Board (and its individual members) fulfils its task due. The BOD’s task
assignment and result of the assessment should be available for shareholders to approach (for
example: in reports that are submitted to the AGMs).

65
5.4. LIMITATION OF STUDY
There are some limitations in this study that should be considered.
Firstly, questionaires were given to shareholders mostly in Vietnam, so that there are few
foreign shareholders responding to the survey. This geographic limitation makes it difficult to
generalize whether there are differences in shareholder satisfaction with the bank between
different geographic areas or nationality.
Secondary, questionnaires were given to individual shareholders and the researcher
collected feedback from them. Qualitative method was conducted by interviewing, discussing
with seniors at MB or some members who are representatives of major/strategic shareholders
of MB. Hence, there is a scope for the respondents to be biased or pretentious and difficult data
collection stemming from shareholder psychology.
5.5. FUTURE WORK
Due to the limitations of this study, a new study with broaden scope of the study should
be conducted in the future. Researcher may conduct comparative studies of shareholders
satisfaction with corporate governance between different banks in the same geographic area or
further studies of impact of Corporate Governance on satisfaction of foreign shareholder at MB.
Furthermore, similar reseaches on shareholder behaviors towards other aspects of the
bank such as Capital Management, R&D, Accountability, etc. might also need to be studied.
These will help the bank better deeply understand shareholders’ needs in order to promote
strengths and improve weaknesses in its business to satisfy shareholders.

66
APPENDICES

Appendix 1: Questionair form

1. Age group:  22 – 35  35 – 50  Over 50
2. Nationality:  Vietnamese  Other nationalities
3. How long have you been MB’s shareholder?
 Less than 1 year  1 – 5 years  Over 5 – 15 years  Over 15 years
Please rate your choice by ticking (√ ).
1 = Excellent; 2 = Good; 3 = Satisfactory; 4 = Needs Improvement; 5 = Unsatisfactory.
Scale
Questions
1 2 3 4 5
1 How do you evaluate the shareholders’ basic rights of attending at MB’s Annual General Meetings?
1.1 The right of all shareholders to participate at the general meeting regardless of the size of their holding.
The channels that MB sends information of annual general meetings to shareholders (letters, sms, phone
1.2
calls, newspapers, MB’s website, etc.)
2 How do you evaluate the shareholders’ basic rights of voting at Annual General Meetings?
2.1 The right of all shareholders to vote at the general meeting regardless of the size of their holding.
2.2 The participation of shareholders in approving issues suggested in annual general meetings of MB.
2.3 The participation of shareholders in the election and dismissal of the Board members.
2.4 The voting method that MB applies in annual general meetings.
3 How do you evaluate the rights of receiving dividends from MB?
3.1 The forms of dividends that MB provides to shareholders (currency, stocks, etc.)
3.2 The processing time being taken for transfer/transmission of shares of MB.
4 How do you evaluate the Information disclosure of MB?
4.1 The information provided on the website of the Bank
4.1.1 Quality of information
4.1.2 Relevance of Information
4.1.3 Adequacy of Information
4.1.4 Updated information available
4.1.5 Ease and Accessibility while navigating

67
 Scale
Questions
1 2 3 4 5
4.2 The receipt of various Documents
General Notice (information on outcomes of the general meeting of shareholders, information of major
changes in MB such as: the amendment, supplement of the Charter or other equivalent documents of the
4.2.1
bank; the increase of charter capital through issuing shares; extraordinary contracts and transactions of the
bank, including acquisition and sale of MB's assets …)
4.2.2 Annual Report
4.2.3 Dividend/ ECS intimations
4.3 The methods that MB discloses information to the public
4.3.1 Announcement in the mass media
4.3.2 Inform via its affiliates, representative offices and branches
5 How do you evaluate the interaction with Investor Service of MB?
5.1 Quality of response
5.2 Speed of response
5.3 Accessibility
6 How do you evaluate the performance and brand value of MB in recent years?
6.1 Bank performance
6.2 Brand value
7 Why are you interested in MB?
7.1 Brand Reliability
7.2 Performance in recent years of MB
7.3 Transparent information disclosure
7.4 Basic rights of shareholders are ensured

68
Appendix 2: Demographic Variables

1. Gender
Frequency Percent Valid Percent Cumulative
Percent
Male 237 59.7 59.7 59.7
Valid Female 160 40.3 40.3 100.0
Total 397 100.0 100.0

Descriptives
Shareholder Satisfaction
N Mean Std. Std. 95% Confidence Interval for Mean Minimum Maximum
Deviation Error Lower Bound Upper Bound
Male 237 1,7700 ,53319 ,03463 1,7018 1,8383 1,00 3,25
Female 160 1,6125 ,43328 ,03425 1,5448 1,6802 1,00 3,00
Total 397 1,7065 ,50079 ,02513 1,6571 1,7560 1,00 3,25

2. Age
Frequency Percent Valid Cumulative
Percent Percent

age 22-35 155 39.0 39.0 39.0

age 35-50 181 45.6 45.6 84.6

Valid
age over 50 61 15.4 15.4 100.0

Total 397 100.0 100.0

3. Nationality
Frequency Percent Valid Percent Cumulative Percent
Vietnamese 350 88.2 88.2 88.2
Valid Other nationalities 47 11.8 11.8 100.0
Total 397 100.0 100.0

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 Descriptives
Shareholder Satisfaction

N Mean Std. Std. 95% Confidence Interval for Mean Minimum Maximum
Deviation Error Lower Bound Upper Bound
Vietnamese 350 1,5907 ,38061 ,02034 1,5507 1,6307 1,00 2,50
Other nationalities 47 2,5691 ,44448 ,06483 2,4386 2,6997 1,25 3,25
Total 397 1,7065 ,50079 ,02513 1,6571 1,7560 1,00 3,25

4. Time being MB’s shareholder

Frequency Percent Valid Cumulative

Percent Percent
less than 1 year 135 34.0 34.0 34.0
from 1 - 5 years 175 44.1 44.1 78.1
Valid from 5 - 15 years 63 15.9 15.9 94.0
over 15 years 24 6.0 6.0 100.0
Total 397 100.0 100.0

Descriptives
Shareholder Satisfaction

N Mean Std. Std. Error 95% Confidence Interval for Mean Minimum Maximum
Deviation Lower Bound Upper Bound
less than 1 year 135 1,8463 ,59849 ,05151 1,7444 1,9482 1,00 3,25
from 1 - 5 years 175 1,6300 ,40899 ,03092 1,5690 1,6910 1,00 2,75
from 5 - 15 years 63 1,6786 ,48241 ,06078 1,5571 1,8001 1,00 3,25
over 15 years 24 1,5521 ,38995 ,07960 1,3874 1,7167 1,00 2,50
Total 397 1,7065 ,50079 ,02513 1,6571 1,7560 1,00 3,25

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Appendix 3: Quality of Investor Service
Quality of response of Investor Service

Frequency Percent Valid Percent Cumulative Percent

Excellent 74 18,6 18,6 18,6

Good 213 53,7 53,7 72,3

Valid Satisfactory 92 23,2 23,2 95,5

Needs Improvements 18 4,5 4,5 100,0

Total 397 100,0 100,0

Accessibility of Investor Service

Frequency Percent Valid Percent Cumulative Percent

Excellent 33 8,3 8,3 8,3

Good 226 56,9 56,9 65,2

Valid Satisfactory 124 31,2 31,2 96,5

Needs Improvements 14 3,5 3,5 100,0

Total 397 100,0 100,0

Appendix 4: Business performance result for period 2015 - 2019

No. Indicators 2015 2016 2017 2018 2019 CAGR
1 Total Asset 221,042 256,258 313,878 362,325 411,488 16.86%
2 Charter Capital 16,000 17,127 18,155 21,605 23,727 10.47%
3 Deposit 181,565 194,812 220,176 239,964 272,710 10.74%
4 Loans 121,349 150,738 184,188 214,686 264,920 21.59%
5 Profit before tax 3,221 3,651 4,616 7,767 10,036 34.31%
6 NPL 1.61% 1.32% 1.20% 1.33% 1.16%
7 ROE 12.46% 11.59% 12.42% 19.1% 21.8%
8 CAR 12.9% 12.5% 12.0% 11.0% 10.0%
9 Total Employee (specific point in time) 7,810 10,656 13,094 15,233 15,691 19.67%
10 Transaction point with license 253 268 285 299 300 4.38%
Source: Collected from Consolidate Financial Statements of MB for 2015, 2016, 2017, 2018, 2019

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