Corporate Governance and Earnings Management: A Study of Vietnamese Listed Banks

Abstract

Earnings management is a matter of concern for organizations because it affects the interests of stakeholders. This reduces the quality of‎information on financial statements of the organizations when the organization performs earnings management behavior. The objective of‎the article is to examine the impact of corporate governance on earnings management of all Vietnamese listed banks from 2015 to 2019.‎The article uses time-series data and ordinary least square (OLS) with Eviews 10.0 software to test the regression model. The agency and‎asymmetry information theory is used to explain the relationship between corporate governance and earnings management. The study‎results show that two variables – the foreign members of the board of directors and audit committee – have an opposite effect on earnings‎management behavior of Vietnamese listed banks. Therefore, the managers of listed banks need to raise awareness to express responsibility‎for honest and reasonable information on the financial statements. This creates trust and credibility for stakeholders. Moreover, Central bank‎of Vietnam should monitor regularly and enforce strict sanctions to limit earnings management behavior of listed banks. This contributes to‎improving the quality of accounting information in the Vietnamese banking sector to meet the trend of international economic integration.