Sustainable Corporate Practices and SDGs: The Role of Managerial Behavior in Earnings Manipulation and Stock Market Stability

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Objective: This study examines the impact of managerial earnings manipulation on stock price crash risk and the moderating role of audit quality in this relationship, with a focus on its implications for sustainable corporate practices and the Sustainable Development Goals (SDGs). Theoretical Framework: The study is grounded in Agency Theory and the Efficient Market Hypothesis (EMH) framework, which explain the link between earnings manipulation and stock price crash risk Method: The study employs pooled OLS and Fixed Effects models to estimate the effects of earnings manipulation on stock price crash risk, using a sample of firms listed on the Hochiminh City Stock Exchange (HOSE) from 2019 to 2023. Results and Discussion: The findings indicate that earnings manipulation significantly increases the likelihood of stock price crashes, as financial misreporting conceals negative information, leading to sudden and severe market corrections when the truth emerges. Moreover, audit quality plays a crucial role in shaping this relationship. While high-quality audits can deter earnings manipulation by enhancing transparency, they may also amplify its market impact by exposing irregularities, triggering stronger price reactions. This dual effect highlights the importance of effective auditing mechanisms in influencing market stability. Research Implications: The findings emphasize the need for stronger financial reporting standards and enhanced audit oversight to support SDG 16 (Peace, Justice, and Strong Institutions) by promoting transparency, accountability, and market stability. Strengthening corporate governance and enforcing stricter disclosure requirements can foster sustainable financial practices, protecting investors and enhancing market confidence in alignment with global sustainability goals. Originality/Value: By exploring the impact of earnings manipulation on stock price crash risk, this research offers new insights into how firms and regulators can promote transparency, accountability, and market stability (SDG 16).