Earnings quality: Does state ownership matter? evidence from Vietnam

Abstract

In regard to profitability and efficiency, although there are mixed empirical evidence, private ownership is predominantly proven to be superior to state ownership. Motivated by this phenomenon, we are curious whether the earnings numbers released by privately owned enterprises are better than the ones published by state-owned companies in term of earnings quality. The results in this research reveal an interesting picture of earnings quality in the Vietnamese financial market. Specifically, using a matched sample of state-owned companies and privately owned companies, we show that private firms are more likely to “manipulate” their reported earnings number than state-owned firms in the Vietnamese financial market. Based on the result, we recommend that when assessing the quality of earnings, analysts and investors should pay more attention to those released by privately owned enterprises.