INDUSTRY TAXONOMY: INADEQUACIES IN THE DISCLOSURE OF INFORMATION ON VIETNAM’S STOCK MARKET

Abstract

This paper examines the development of major industry taxonomies in the world, and then compares to the regulatory framework for industry classification in Vietnam. Next, the factual publication of information about the industry classification of listed companies in Vietnam is found out to check whether this publication can help investors and researchers to identify the type of diversification strategies (related or unrelated) the companies are applying. The results show that the regulations on industry taxonomy in Vietnam are rather similar to International Standard Industrial Classification of All Economic Activities version 4th (ISIC, Rev.4). However, the factual publication of information about the business activities of companies listed on the stock market in Vietnam is not consistent with the legal framework for industry classification. Additionally, there is also no consensus on the disclosure of industry classification information between companies listed on the Ho Chi Minh Stock Exchange and on the Hanoi Stock Exchange in this country. This situation makes it difficult for investors, and researchers to identify which type of diversification strategy that the companies in Vietnam apply before making their decisions.

Keywords: Industry taxonomy; Diversification strategy; Vietnam.