Our research examines the effect of leverage on the form and extent of earnings management in Vietnamese listed firms. We use panel data of 241 companies on Vietnam stock markets in the period from 2010 to 2016 (1687 firm-years) and conduct GMM regression. Four models are employed to estimate the level of discretional accruals and real earnings management. Our research finds a positive relationship between leverage and earnings management, which is consistent to "debt hypothesis". Furthermore, a preference for real earnings management over accrualbased earnings management is observed among highly leverage firms. The findings notice the substitution between these two forms of earnings management and reinforce full attention to both accrual-based earnings management and real activities manipulations rather than to separated earnings management strategy.