Article: Shareholder identity and real earnings management: empirical evidence from Vietnam Journal: Afro-Asian Journal of Finance and Accounting (AAJFA) 2024 Vol.14 No.3 pp.432 - 450 Abstract: The purpose of this article is to investigate the link between shareholder identification and real earnings management. Managerial ownership (MO), foreign ownership (FO), and state ownership (SO) are all used in the study to establish shareholder identity. The abnormal discretionary spending, abnormal production cost, and abnormal cash flows from operations are also used to assess real earnings management. The data of 390 Vietnamese listed companies was collected from the FiinPro platform, leading to a sample of 1,170 firm-year observations over the investigation period from 2017 to 2019. The study reveals that FO and SO have a large negative influence on actual profits management, despite the fact that they have the capacity to improve the quality of financial information to a greater level. In contrast, this paper shows no evidence for a relationship between MO and shareholder identity. Therefore, we suggested that policymakers should create favourable conditions to attract foreign investors as an effective monitoring mechanism and pay attention to the role of SO. Our findings also have significant implications for providing a more comprehensive understanding for firm managers and investors about the role of firms' sustainable ownership structure in deterring and reducing earnings management. Inderscience Publishers - linking academia, business and industry through research

Title: Shareholder identity and real earnings management: empirical evidence from Vietnam

Authors: Hien Thu Bui; Huong Hoang Nguyen Le

Addresses: Department of Financial Management, Faculty of Business Administration, Foreign Trade University, 91 Chua Lang Street, Dong Da District, Hanoi, Vietnam ' Department of Audit, Ernst & Young Vietnam Limited, 16 Phan Chu Trinh Street, Hoan Kiem District, Hanoi, Vietnam

Abstract: The purpose of this article is to investigate the link between shareholder identification and real earnings management. Managerial ownership (MO), foreign ownership (FO), and state ownership (SO) are all used in the study to establish shareholder identity. The abnormal discretionary spending, abnormal production cost, and abnormal cash flows from operations are also used to assess real earnings management. The data of 390 Vietnamese listed companies was collected from the FiinPro platform, leading to a sample of 1,170 firm-year observations over the investigation period from 2017 to 2019. The study reveals that FO and SO have a large negative influence on actual profits management, despite the fact that they have the capacity to improve the quality of financial information to a greater level. In contrast, this paper shows no evidence for a relationship between MO and shareholder identity. Therefore, we suggested that policymakers should create favourable conditions to attract foreign investors as an effective monitoring mechanism and pay attention to the role of SO. Our findings also have significant implications for providing a more comprehensive understanding for firm managers and investors about the role of firms' sustainable ownership structure in deterring and reducing earnings management.

Keywords: shareholder identity; real earnings management; managerial ownership; foreign ownership; state ownership; Vietnam.

DOI: 10.1504/AAJFA.2024.138391

Afro-Asian Journal of Finance and Accounting, 2024 Vol.14 No.3, pp.432 - 450

Received: 28 Oct 2021
Received in revised form: 09 Sep 2022
Accepted: 05 Oct 2022
Published online: 02 May 2024 *

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Title: Shareholder identity and real earnings management: empirical evidence from Vietnam

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