SYNTHESIS FACTORS REPRESENTING CORPORATE GOVERNANCE IMPACT ON EARNINGS MANAGEMENT OF THE LISTED MANUFACTURE COMPANIES IN VIETNAM

Abstract

This research aims at assessing the impact of corporate governance through two synthesis factors of the Board and the Audit Committee to the behavior of earnings management through a data sample consisting of 58 listed manufacture companies from 2012 to 2016 in Vietnam securities market. The regression results according to the random estimation model measure the level of cash flow abnormality, production cost and arbitrary cost abnormality; the representative of earnings management behaviors according to Roychowdhury (2006) model acknowledges that the synthesis factor of the Board has an inverse and statistically significant correlation with the earnings management behavior. At the same time, the research also acknowledges that the control variables in regression model such as big4 audit company and net cash flow from business activities has a negative correlation to earnings management behavior. Finally, the research has contributed to theoretical foundation on the effectiveness of the Board to limit the earnings management behavior as well as provide effective tools for listed manufacture companies as well as audit companies in decision making to preserve investment capital.