Earnings management around equity issuances in Vietnamese listed firms

Abstract

This study examines accrual earnings management in Vietnamese listed firms around equity issuances. Using a matching approach, we find that issuers tend to report higher earnings by aggressive recognition of discretionary current accruals before and during the years of equity offering. This results in significantly larger abnormal stock returns for the issuing firm-years, as the capital market overvalues firms with higher accrual earnings. However, regression results show that investors are subsequently disappointed by negative reversals in earnings, and suffer from significant negative abnormal returns in the third year after the issuance. These results provide additional empirical evidence in an emerging and transition market context, and caution investors against fixation on reported earnings in equity offerings.

Financial Reporting Fraud and Models to Assist in Detecting Financial Statement Fraud

“…The model was built with 8 financial indicators for the purpose of detecting fraudulent financial statements of enterprises (Beneish, 1999). According to authors Nguyen & Nguyen (2016), the "M-score model is one of the useful techniques in detecting earnings manipulation behavior of companies and can be applied to improve the quality of reporting financial reporting and better protection for investors" (p.14). Holda, (2020) also confirmed the effectiveness of the M-score model in detecting fraud and manipulation of financial statements in Poland (p.389).…”

Benford Yasasi Ve Beneish Model İle Muhasebe Mani̇pülasyonunun Beli̇rlenmesi̇: Ampi̇ri̇k Bi̇r Uygulama

“…Endeks değerinin 1'den büyük olması varlıkların değerinin hızla azaldığını veya yanıltıcı değerlerin kullanıldığını ifade edebilir (Ali & Flayyih, 2021, s. 7;Nguyen & Nguyen, 2016). SGAI endeks değeri şirketin esas faaliyet giderlerinden olan pazarlama, satış, dağıtım ve genel yönetim giderlerindeki verimsizliği tespit etmeyi amaçlamaktadır.…”

“…TATA tahakkuk esası çerçevesinde şirketin borç-alacak ile gelir-gider kalemlerinde, şirket yönetiminin kararı doğrultusunda meydana gelen değişimi göstermektedir. Yüksek düzeydeki artış/azalış muhasebe manipülasyonunun varlığı anlamına gelebilir (Ali & Flayyih, 2021, s. 7;Nguyen & Nguyen, 2016). Ayrıca bu oranın negatif değer alması ise şirketin ana kaynakları dışında herhangi bir kaynaktan kâr elde etmediğini göstermektedir (Mehta & Bhavani, 2017, s. 703).…”

The impact of corporate governance mechanisms on earnings quality during the COVID-19 Pandemic. Evidence from the UK

“…Conversely, in restricted markets with strong corporate governance, directors often replace accruals management with real earnings management. In a study carried out by Nguyen et al (2023), they examined a sample of 800 non-financial enterprises in Vietnam from 2008 to 2018. The findings revealed that the quality of corporate governance has a mitigating effect on earnings management, regardless of whether it is assessed by accruals or actual earnings.…”