This paper aims to offer a critical assessment of Vietnam’s corporate governance models.
This paper uses black letter methodology and comparative legal analysis and is based upon secondary sources.
Vietnam’s three corporate governance models have similarities with the globally predominant models but differ from them in some respects. The differences stem partly from the French colonial legacy and demonstrate Vietnamese lawmakers’ original approach. Two of those models exhibit flexibility, while the third remains heavy. However, the local business community remains sceptical about the efficacy of independent directors. Shareholders retain much power as regards managerial decisions, which calls for a reform in the context of greater dispersion of ownership in public companies.
This paper is conditioned by three main limitations. First, it has not explained why Vietnamese lawmakers keep the inspection committee mechanism in Model 1 while French law has phased it out. Understanding the rationale would help assess this model more in line with Vietnam’s context. Second, some of the author’s interpretations of the inspection committee’s inefficiency are untested. The inclusion of empirical data would certainly shed some light on the main cause(s) of such inefficiency. Finally, this paper investigates only VN30 companies. The implication of this sample choice is that its findings regarding corporate model choices may not provide a full picture.
This paper provides a comprehensive analysis of the strengths and weaknesses of Vietnam’s corporate governance models, explains the Vietnamese approach and practice and suggests avenues for reform.
