The Evaluation Of The Influence Of Ownership Structure On Earnings Management In Vietnam – A Comparison Between Abem And Rem.
Abstract
Although the ownership structure is fundamental to corporate accounting behaviors, the current literature provides scarce evidence about the governance effect of ownership on real earnings management (REM). This study runs a regression model with industry and time-fixed effects to investigate the impact of ownership structure including two dimensions that are state ownership and the ownership of the largest shareholder on earnings management by both the “accrual-based” and “real-activities” levels. We seek to address this issue by using a sample of 692 non-financial listed firms on the Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) during 2011 – 2020. Our research finds that the Vietnamese state-owned enterprises are less likely to engage in earnings management activities (EM) while the companies with a high power concentration of the largest shareholders are more likely to engage in those activities. Our study contributes to the existing literature on the relationship between ownership structure and earnings management while contributing to the understanding of REM in emerging economies. This paper reveals the earnings manipulation situation in Vietnamese firms and implies that the government and BOD should improve corporate governance practices to increase reduce the conflicts of interest between shareholders.