Thang Viet Doan

Type of the article: Research Article

Abstract
Prompted by the recent increase in accounting manipulation cases and the deterioration in Vietnam, this study investigates the significance of earnings management and whether financial distress leads to increased earnings management in corporate activities. This study examines the impact of financial distress on earnings management among firms listed on Vietnam’s stock exchanges from 2013 to 2024, a period when significant changes in economic conditions occurred. The article has utilized the Modified Jones Model and Raman and Shahrur Model to analyze the influence of financial distress and other factors on the earnings management of listed companies. The regression results provide evidence that firms with mild distress tend to engage more in income-increasing practices, while those under severe distress show a reduced tendency to manipulate earnings. However, the relationship between financial distress and income-decreasing earnings management remains inconclusive. These findings underscore the need for enhanced transparency and differentiated oversight mechanisms in Vietnam’s financial reporting environment, especially for firms not immediately flagged as financially risky. The research contributes to the existing literature by offering new insights into managerial behavior under varying financial conditions in an emerging market context.

Acknowledgment
The authors gratefully acknowledge the financial support from the Banking Academy of Vietnam.