A research on the impact of financial indicators on earnings management – empirical evidence in listed firms on the stock market in Vietnam

Abstract

In the context that Vietnam's stock market is volatile as it is now, investors need to develop a careful and thorough strategy. Many factors affect the investment portfolio decision, one of which is the profit target on the business's income statement. It may also be what motivates managers to implement "Earnings management" to attract investors to participate. To learn and evaluate more about the factors affecting "Earnings management", the research team carried out the topic "Research on the impact of financial indicators on earnings management - Empirical evidence" in companies listed on the Vietnamese stock market. By quantitative research method, the research team collects secondary data from 175 companies listed on the Vietnam stock market in the period from 2017 to 2021. From the theoretical basis and previous studies, the group has included six indicators in the model of financial indicators affecting "Earnings management". Among them, the team found that there are two indicators that previous studies have not paid attention to, namely, "Dividend Payment Ratio" and "Sustainable Growth Rate". The obtained results show that there are two variables that have a positive impact on "Earnings management", that is: "financial leverage and return on equity". While other variables such as: "return on assets, company size, sustainable growth rate and dividend payout ratio" do not affect earnings management. Based on the obtained results, the research team makes recommendations to state agencies, listed companies and investors to identify and control Earnings management by looking at abnormal fluctuations in financial indicators.