Impact of corporate governance on earnings management – Experimental evidence on listed commercial banks in Vietnam
-
DOIhttp://dx.doi.org/10.21511/bbs.17(4).2022.16
-
Article InfoVolume 17 2022, Issue #4, pp. 189-197
- Cited by
- 651 Views
-
154 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Earnings management is the practice of adjusting accounting policies to change earnings. It affects the earnings of the banking industry, including listed commercial banks. It also reduces the trust of investors because the information provided is unreasonable for the bank system. Corporate governance as a management organization can prevent earnings management in the banking industry. The paper aims to consider the impact of corporate governance on the earnings management of listed commercial banks in Vietnam. The paper uses a time series of ten years from 2012 to 2021. The research uses experiments to test the hypothesis of the model. The result finds three factors positively affect the earnings management of listed commercial banks, including the number of members, professional qualifications, and meetings of the board of directors. The number of members is the strongest influence on earnings management, while the professional qualifications have the lowest effect. The results also demonstrate that listed commercial banks have practiced earnings management in recent years. From there, the paper proposes some policies to prevent the earnings management of listed commercial banks to improve the quality of information.
- Keywords
-
JEL Classification (Paper profile tab)D81, G34, M41, M42
-
References33
-
Tables4
-
Figures0
-
- Table 1. Descriptive statistics
- Table 2. Correlations
- Table 3. Regression of feasible generalized least squares
- Table 4. VIF of the model
-
- Azeez, H. A. R., Sukoharsono, E. G., & Andayani, W. (2019). The Impact of the Board Characteristics on Earnings Management in the International Oil and Gas Corporations. Academy of Accounting and Financial Studies Journal, 23(1), 1-26.
- Bala, H., & Kumai, G. (2015). Board characteristics and earnings management of listed food and beverages firms in Nigeria. International Journal of Accounting, Banking and Management, 3(3), 1-14.
- Chtourou, S. M., Bedard, J., & Courteau, L. (2001). Corporate governance and earnings management.
- Cornett, M. M., Marcus, A. J., & Tehranian, H. (2008). Corporate governance and pay-for-performance: The impact of earnings management. Journal of Financial Economics, 87(2), 357-373.
- Daghsni, O., Zouhayer, M., & Mbarek, K. B. H. (2016). Earnings management and board characteristics: evidence from French listed firms. Account and Financial Management Journal, 1(2), 92-110.
- Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting earnings management. Accounting Review, 70(2), 193-225.
- Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman Publisher.
- González, J. S., & García-Meca, E. (2014). Does corporate governance influence earnings management in Latin American markets? Journal of Business Ethics, 121(3), 419-440.
- Gulzar, M. A., & Wang, Z. (2011). Corporate governance characteristics and earnings management: Empirical evidence from Chinese listed firms. International Journal of Accounting and Financial Reporting, 1(1), 133-151.
- Hair, J. F., Anderson, R. E., Tatham R. L, & Black, W. C. (1995). Multivariate Data Analysis. New Jersey: Prentice Hall.
- Hamid, M., & Bello, M. S. (2019). Impact of the Board Characteristics On Earning Management: A Study On Private Sectors in Malaysia. International Journal of Innovative Research and Advanced Studies, 6(1), 74-79.
- Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13(4), 365-383.
- Hooghiemstra, R., Hermes, N., Oxelheim, L., & Randøy, T. (2019). Strangers on the board: The impact of the Board internationalization on earnings management of Nordic firms. International Business Review, 28(1), 119-134.
- Hsu, M. F., & Wen, S. Y. (2015). The influence of corporate governance in Chinese companies on discretionary accruals and real earnings management. Asian Economic and Financial Review, 5(3), 391-406.
- Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure. Journal of Financial Economics, 3(4), 305-360.
- Kankanamage, C. A. (2015). The relationship between board characteristics and earnings management: evidence from Sri Lankan listed companies. Kelaniya Journal of Management, 4(2), 36-43.
- Lakhal, F., Aguir, A., Lakhal, N., & Malek, A. (2015). Do women on boards and in top management reduce earnings management? Evidence in France. Journal of Applied Business Research, 31(3), 1107-1118.
- Levitt Jr, A. (1998). The numbers game. The CPA Journal, 68(12), 14-19.
- Metawee, A. (2013). The relationship between characteristics of the audit committee, board of directors, and level of earning management, Evidence from Egypt. Journal of International Business and Finance, 6(1), 1-34.
- Moradi, M., Salehi, M., Bighi, S. J. H., & Najari, M. (2012). A Study of the relationship between board characteristics and earning management: Iranian scenario. Universal Journal of Management and Social Sciences, 2(3), 12-29.
- Nugroho, B. Y., & Eko, P. U. (2012). Board characteristics and earning management. Bisnis & Birokrasi Journal, 18(1), 1-10.
- Oladipupo, O. F. (2018). Corporate Governance and Earning Management of Deposit Money Banks in Nigeria. International Journal of Scientific & Engineering Research, 9(7), 184-199.
- Organization for Economic Cooperation and Development (OECD). (2021). Principles of Corporate Governance.
- Osemene, O. F., Adeyele, J. S., &. Adinnu, P. (2018). The impact of the ownership structure and board characteristics on earnings management in Nigeria’s listed deposit money banks. Ekonomski Horizonti, 20(3), 215-227.
- Rahman, R. A., & Ali, F. H. M. (2006). Board, audit committee, culture and earnings management: Malaysian evidence. Managerial Auditing Journal, 21(7), 783-804.
- Ronen, J., & Yaari, V. (2008). Earnings management. New York: Springer US.
- Sadjiarto, A., Setio, C., & Budiarti, W. R. (2019). Ownership Structure and Earnings Management in Indonesian Listed Banks. Journal of Economics and Business, 2, 261-272.
- Saiful, A. D., & Dyah, A. (2018). Corporate Governance and Earnings Management: A Study of Indonesian Conventional and Islamic Banks. Proceedings of the 1st Aceh Global Conference (AGC 2018).
- Shen, L. (2016). Research on Industry Competition, Ownership Structure, and Earnings Management: Empirical Analysis based on Listed Bank. International Journal of Smart Home, 10(3), 221-230.
- Thinh, T., Q., Thuy, V. T. T., Danh, L. C., & Tuan, D. A. (2022). Influence of the board of directors on discretionary accruals: Evidence from Vietnamese listed companies. Problems and Perspectives in Management, 20(2), 361-371.
- Tran, Q. T., Lam, T. T., & Luu, C. D. (2020). Corporate Governance and Earnings Management: A Study of Vietnamese – listed Bank. Journal of Asian Finance, Economics, and Business, 7(12), 389-395.
- Vietnam National Assembly. (2019). Law on Securities.
- Vietnamese National Assembly. (2020). Law on Enterprises.