Ownership Structure And Real Earnings Management: Evidence From Vietnam

Abstract

This research delves into how earnings management in Vietnam is influenced by the structure of company ownership. Notably in Vietnam, the control of businesses is often in the hands of a few predominant shareholders, who have a substantial role in shaping both direct and indirect managerial decisions. Previous studies have established a critical link between the way a company is owned and the management of its earnings. The key aim of this study is to delve into the impact that the ownership composition within a company has on the management of its earnings. An analysis was conducted on a group of 489 non-financial companies that are publicly traded on the Vietnamese stock market. The findings indicate that both a high concentration of ownership and state-controlled ownership tend to have a positive influence on earnings management. In a contrasting manner, ownership held by company managers and international stakeholders tends to reduce earnings management practices. Additionally, this study also considered five control variables: board size and cash flow were found to have a positive relationship with earnings management, whereas a company's financial performance, company size, and financial leverage were found to have a negative relationship with earnings management practices. REM, FEM, GLS, and OLS regression methods are employed for processing data.