| dc.description.abstract | It can easily be seen that earnings management, an act of regulating the financial statements of managers resulting in an inaccurate reflection of the company's business results in order to conceal its partners (such as shareholders and debt owners ...) or affect the outcome of contracts, could decrease the quality of reports on earnings and the quality of disclosure information in general. Besides, the theory of accounting underlines a strong connection between the quality of accounting disclosure and market liquidity (Leuz and Verrecchia 1999; Kim and Verrecchia 2001; Lambert et al. 2007). However, existing empirical research has not shown a strongly linked between earnings management to market liquidity. One question posed in this situation is whether investors and policy makers need to pay attention to the importance of economic consequences from the company's information disclosure (in general) and practice of earnings management (in particular).
This study is aimed at debating the impact of earnings management on liquidity. By using data from 147 non-financial companies in Vietnam, which are listed on Ho Chi Minh City Stock Exchange. This study examines data of companies for 7 years (2011 - 2017). The observed companies are operating in different sectors. The research results show that the difference between buying and selling prices are larger when the company shows signs of earnings management. In this paper, we also use more than one measure of liquidity, to answer the question: In the highly concentrated stock market like Vietnam, is the liquidity of the stock affected by earnings management factors?
By using testing and measurement methods such as FEM, REM, regression analysis, empirical results show that market liquidity is lower for firms that demonstrate greater earnings management capabilities. It can be seen that adverse selection theory and the role of corporate governance have been clarified through the results of this report. The consideration of protecting shareholders' interests has affected the improvement of stock market liquidity.
In the actual testing process, the values that brought are really clear. However, we believe that revolving around the interaction and results of this impact between two factors: liquidity and earnings management, still need more experimental studies, especially for emerging stock markets like Vietnam. | en_US |
