Real earnings management trends in the context of the COVID-19 pandemic: The case of non-financial listed companies in Vietnam

  • Received May 27, 2023;
    Accepted June 27, 2023;
    Published June 30, 2023
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/imfi.20(2).2023.25
  • Article Info
    Volume 20 2023, Issue #2, pp. 295-306
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Real earnings management comprises the intervention by managers intending to change business strategies or policies to achieve specific goals. The paper aims to examine trends and levels of real earnings management in the context of the COVID-19 pandemic in Vietnam. The study uses time series data, and the sample includes 1,800 observations from 2016 to 2021. The methods of the study are regression analyses of the real earnings management model. The results indicate that the COVID-19 pandemic positively and significantly affected real earnings management of companies listed on the Vietnamese stock exchange. The trends and levels of real earnings management in the context of the COVID-19 pandemic increase depending on the severity of the pandemic. In terms of applications, the study provides evidence that the quality of financial reporting is lower during the pandemic. Listed enterprises in Vietnam are using high financial leverage, leading to a higher vulnerability to shocks such as the pandemic. Therefore, the real earnings management technique mainly used by managers is operating cash flow adjustment by using income maximization strategies to increase the ability to borrow capital to maintain business operations. The study suggests that the choice of income maximization or income minimization strategy depends mainly on commitments with the capital provider (credit institutions), specific contexts, and economic factors.

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    • Table 1. The definition of variables and methods to measure the level of REM
    • Table 2. Descriptive statistics of the variables in the model
    • Table 3. Two-sample t-tests
    • Table 4. Pearson’s correlation coefficient
    • Table 5. Regression results according to each proxy of REM
    • Table 6. REM measures result
    • Table 7. REM regression results by year during the pandemic
    • Conceptualization
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung, Thao Bui Thi Thu
    • Data curation
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung
    • Formal Analysis
      Tuan Dang Anh, Thao Bui Thi Thu
    • Investigation
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung, Thao Bui Thi Thu
    • Methodology
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung
    • Project administration
      Tuan Dang Anh
    • Resources
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung
    • Software
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung, Thao Bui Thi Thu
    • Supervision
      Tuan Dang Anh
    • Validation
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung, Thao Bui Thi Thu
    • Visualization
      Tuan Dang Anh
    • Writing – original draft
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung
    • Writing – review & editing
      Tuan Dang Anh, Nguyen Ngoc Khanh Dung, Thao Bui Thi Thu