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Abstract

Board independence is reflected in many aspects, the most common of which is the existence of independent non-executive directors and the separation of Chairman and CEO roles. This study examines whether a highly independent board deters earnings management by its managers. Discretionary accruals are used to measure earnings management while current operating cash flow divided by lagged assets of current and future are used to measure manager's incentives. On a sample of 1230 observations from 244 HOSE listed companies that belong to VNX Allshare index in the period 2012-2017, this study provides significant evidence for corporate governance issues of Vietnamese listed companies. Specifically, the experimental results show that when the current period performance is poor and expected future period performance is good, and if one person holds both Chairman and CEO roles, he will carry out the transfer of a part of the future profits to the present to improve current year’s performance to satisfy personal interests. Unfortunately, all variables related to independent directors are statistically insignificant, confirming the fuzzy role of independent directors in monitoring and preventing earnings management in particular and agency problems in general. This study offers implications for the effectiveness and substance of the independent role of the board of directors in Vietnamese enterprises.



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Article Details

Issue: Vol 3 No SI (2019): Special Issue: Industrial Management (Under Publishing)
Page No.: Online First
Published: Apr 11, 2020
Section: Research article
DOI: https://doi.org/10.32508/stdjelm.v3iSI.613

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Creative Commons License

Copyright: The Authors. This is an open access article distributed under the terms of the Creative Commons Attribution License CC-BY 4.0., which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

 How to Cite
Phuong Nhi, D., & Thu Hien, N. (2020). Board independence and earnings management – a study of listed companies on Ho Chi Minh stock exchange. Science & Technology Development Journal - Economics - Law and Management, 3(SI), Online First. https://doi.org/https://doi.org/10.32508/stdjelm.v3iSI.613

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