Is modified Jones model effective in detecting earnings management? Evidence from IPO company on HOSE
Abstract
This study aims to evaluate the effectiveness of Modified Jones model in Vietnam
through the IPO firms in Ho Chi Minh stock exchange during the period from 2007-2009.
Furthermore, the comparison between this model and the extended model developed by
Yoon & Miller is conducted because prior researches showed that the Yoon and Miller is
far better than Modified Jones model and is said to be well fitted for Korean as well as
Asian firms. After research, we conclude that Modified Jones model encounters poor
goodness of fit as well as misspecification errors in Vietnam situation while Yoon &
Miller model proposes a better explanatory power even though the adjusted R-square of
the two models is nearly the same.