Audit Quality, Foreign Ownership, and Stock Price Synchronicity: Evidence from Vietnam's Emerging Market

Abstract

This study investigates the impact of audit quality and foreign ownership on stock price synchronicity in Vietnam's emerging market. Using a panel dataset of 356 non-financial firms listed on the Ho Chi Minh City Stock Exchange from 2019 to 2023, we employ a system GMM model to address potential endogeneity issues. Our findings reveal that both higher audit quality and increased foreign ownership are associated with greater stock price synchronicity. Additionally, we find that audit quality moderates the relationship between discretionary accruals and stock price co-movement, while foreign ownership does not exhibit a significant moderating effect. These results contribute to the ongoing debate about the implications of stock price synchronicity in emerging markets and provide insights for policymakers and investors. Our study highlights the complex interplay between external monitoring mechanisms, ownership structures, and information environments in shaping stock price behavior in developing economies.