Corporate Governance And Earnings Management

Abstract

My study examines whether corporate governance factors affect earnings management practice among Vietnamese firms. The sample includes 249 firm-year observations from total 303 non-financial publicly listed companies on HOSE between 2016 and 2021. My investigations suggest hiring Big-4 auditing firms and having female directors enhance financial reporting quality and decrease the demand for discretionary accruals management. Conversely, non-executive independent directors have not successfully curbed earnings manipulation. Unlike the previous worth relevance literature, I do not observe a statistical correlation between the size of board and discretionary accruals management by Vietnamese firms. Considerablely, I find that firms with CEO duality has a stronger influence on non-executive directors as well as Big-4 audit firms in relation with discretionary accruals management relative to firms without CEO duality. More specifically, the result implies that the association between non-executive directors, audit quality as well as CEO duality and discretionary accruals management is more pronounced in high sales growth firms relative to low sales growth firms. The paper extends the body of knowledge by empirically investigating earnings management topics and is meaningful to policy-makers and investors.