The impact of ownership structure, financial distress on earnings
management: The case of Vietnam
Abstract
The paper examines the effect of ownership structure on profit
management in Vietnam. In this study, we explore how three components of
ownership structure - the degree of ownership concentration of managers,
foreign ownership ratio and state ownership ratio - affect earnings
management. In addition, we also consider whether ownership structure
affects profit management during financial constraints. We
used REM, FEM, GLS, and GMM regression methods. The study results have
shown that ownership structure with foreign ownership has a positive
effect on earnings management, whereas one with a proportion of state
ownership has a contradicting effect. While the degree of ownership
concentration does not affect the profit management, in the context of
financial restrictions, the ownership ratio has an impact on the
management of earnings. Controllable variables in the model, such as
firm size, financial leverage, growth rate, profitability and audit
quality, all have an impact on earnings management. The results could,
potentially, be the basis to help businesses in restricting earnings
management behaviour.