Predicting Vietnam Listed Firms’ Financial Statement Fraud Risk

Abstract

Different from previous studies in Vietnam, this paper focuses on fraud risk, identifying the factors that affect the risk of financial reporting fraud of listed companies in Vietnam. Moreover, the research aims to forecast the possibility of fraudulent financial statements of listed companies in Vietnam. Based on M-score models (Beneish, 1999) and F-score model (Dechow et al., 2011), this research develops experimental results based on a sample of 307 companies with 3684 financial statements observations from 2007 to 2018. Research results show that the higher financial leverage in firms’ financial statements, the higher risk of financial statements, and the higher fraud’s tendency. Moreover, the findings also show that perennial firms, bigger firms, and listed firms, they likely to have a higher tendency of financial statement fraud. Research results show that the higher the financial leverage ratio, the more errors in reporting, the higher the tendency for fraud. At the same time, the older a business, the larger its scale and listed on the stock exchange, the more likely it is that the financial statements are fraudulent.