The impact of earnings management on market liquidity

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This article investigates the impact of earnings management on market liquidity measured by the depth of the market. Managers have desired to provide amazing performance of companies, manage their earnings through non-discretionary accruals. Consequently, investors have trouble evaluating the stock value and misunderstanding of the market liquidity because of manipulated information.
To this aim, the fixed-effect model (FEM) is implemented to analyze the financial information of 170 listed firms on the Vietnam Stock Exchange over the period 2013–2016. The empirical results emphasized that market liquidity is influenced by earnings management that means the higher level of earnings management, the better equity liquidity. The findings provide additional insight into the determinants of stock liquidity such as earnings management, firm size, daily trading dollar volume of stock, average daily trading dollar volume of the firm, daily returns of stock, daily stock returns, average closing stock price of the firm.

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    • Table 1. Descriptive statistics
    • Table 2. Pearson correlation matrix
    • Table 3. The multicollinearity matrix
    • Table 4. Results of regression by pooled OLS, REM, and FEM
    • Conceptualization
      Do Thi Van Trang
    • Data curation
      Do Thi Van Trang
    • Formal Analysis
      Do Thi Van Trang
    • Funding acquisition
      Do Thi Van Trang, Dinh Hong Linh
    • Investigation
      Do Thi Van Trang
    • Methodology
      Do Thi Van Trang, Dinh Hong Linh
    • Resources
      Do Thi Van Trang, Dinh Hong Linh
    • Supervision
      Do Thi Van Trang, Dinh Hong Linh
    • Writing – original draft
      Do Thi Van Trang
    • Writing – review & editing
      Do Thi Van Trang, Dinh Hong Linh
    • Project administration
      Dinh Hong Linh
    • Validation
      Dinh Hong Linh