Effect of Earning Management on the Stock Price of Enterprises Listed in Ho Chi Minh City in the Period of Covid 2019-2021

Abstract

Purpose: The aim of this study is to examine the phenomenon of earnings management (EM) and its impact on stock prices, providing valuable empirical evidence in this field. Theoretical framework: Agency theory suggests that profit management behavior comes from conflicts between managers and shareholders. The efficient market theory assumes that information will be reflected in stock prices. Design/methodology/approach: To achieve the research objectives, the study analyzes the financial statements (FRQs) of 74 enterprises listed on the Ho Chi Minh Stock Exchange in Ho Chi Minh City. The data collected in the period from 2019 to 2021, Covid-19 pandemic and analysis by GSEM. Findings: Specifically, the study shows that earnings management exerts a direct negative impact on stock prices. Additionally, it highlights the positive influence of EM on the quality of FRQ information. However, the quality of FRQ news demonstrates a negative effect on stock prices. The study also investigates the role of intermediate variables in the relationship between financial reporting information quality and stock prices. Research, Practical & Social implications: By providing empirical evidence and highlighting the significance of accounting practices in the capital market, the study adds value to academic research, while offering practical insights for investors, regulators, and businesses. Originality/value: By providing empirical evidence and highlighting the significance of accounting practices in the capital market, the study adds value to academic research, while offering practical insights for investors, regulators, and businesses.