Mistakes in Vague Public Disclosures
Mr. Vu Duy Khanh, Director of the Analysis Center of Smart Invest Securities JSC (UPCoM: AAS), shared with us that one of the most common mistakes made by businesses today is making public disclosures with complex, highly technical language, or vague and lacking clear, specific details.
“Many businesses fail to convey their business model, growth strategy, or competitive advantages in a comprehensible manner. Instead, they focus on dry numbers or peripheral information, making it challenging for investors to grasp the full picture. Additionally, a lack of transparency or infrequent updates contributes to the vagueness,” according to Mr. Khanh.
Some businesses may intentionally disclose vague information to create misunderstandings. “For example, when it comes to project information, some businesses deliberately interchange concepts or hide certain details to mislead investors into incorrect valuations. Potential legal obligations that significantly impact the company’s assets are also rarely fully disclosed. Over time, these events erode investors’ trust in the information conveyed by the business,” the expert quoted.
This vagueness significantly impacts investors’ decisions to invest or not. According to Mr. Khanh, low liquidity of a stock can be an indicator of ineffective information dissemination. If a business fails to clearly communicate its value, strategy, or growth prospects, investors will lack the confidence to trade the stock, resulting in low liquidity. However, he also noted that the reason could lie in specific contexts.
“Low liquidity can also be due to other factors such as a small market size, cautious investor sentiment, or a lack of interest from financial institutions. There are also cases where the stocks are too good, and shareholders refuse to sell, leading to low liquidity. Other potential investors are then less interested in trading due to the lack of selling supply. Therefore, it’s essential to consider the specific context,” added Mr. Khanh.
Another mistake is when businesses only focus on optimistic information and gloss over risks. According to Mr. Khanh, transparency about risks builds long-term trust with investors, especially in a volatile market. Hiding or avoiding risks can lead to a loss of confidence when those risks materialize, damaging the company’s reputation.
Communication is Key to Transparency
According to the AAS expert, the format of disclosure documents such as annual reports and investor calls significantly impacts investors’ understanding. A clear, concise, and visually appealing presentation, along with easy-to-understand language, enhances investors’ ability to grasp the information.
Mr. Khanh mentioned that many listed companies in Vietnam have improved their presentation quality, especially the larger ones. “Many annual reports now feature modern designs and more concise and visual content, such as those from VPB, TCB, and MWG. However, there are still some businesses that lack consistency in their information presentation, with lengthy and unfocused formats that fail to highlight core indicators or provide timely updates, making it challenging for investors to evaluate,” he added.
Additionally, as younger generations of investors, such as Gen Z and even Gen Alpha, enter the market, the communication approach needs to evolve. Mr. Khanh observed that, alongside growth stories, these younger investors show a heightened interest in core values and corporate culture, particularly in companies whose values align with their lifestyles, such as sustainability, social responsibility, or innovation. Moreover, the company’s presence and engagement on social media platforms significantly influence this demographic’s investment decisions.
– 10:00 03/09/2025
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