Thi Minh Chau Hoang

Division of Finance and Accounting, Trade Union University, Hanoi, Vietnam

E-mail: chauhm@dhcd.edu.vn

ORCID 0009-0002-3319-3059

Does corporate governance affect the nexus between earning management and investment efficiency? Evidence from Vietnam

Thi Kim Anh Vu

Division of Scientific Management and Information Documentation, Trade Union University, Hanoi, Vietnam

E-mail: kimanhvt@dhcd.edu.vn

ORCID 0000-0003-3647-8041

Thi Thuy Van Ha

Institute of Accounting and Auditing, Thuongmai University, Hanoi, Vietnam

E-mail: van.htt@tmu.edu.vn

ORCID 0000-0001-6259-6338

Tran Thai Ha Nguyen

Department of Science, Technology and International Projects, Ho Chi Minh City University of Economics and Finance, Vietnam

E-mail: hantt@uef.edu.vn

ORCID 0000-0003-2598-3720

Abstract. This research explores how earnings management (EM) influences investment efficiency (IE) in Vietnamese non-financial companies from 2009 to 2022 while also examining the moderating effects of corporate governance (CG) mechanisms on this relationship. IE is measured based on the residual models of Richardson (2006) and Huang (2020), while EM is proxied by accrual-based and real earnings management measures following Kothari et al. (2005) and Roychowdhury (2006), this study indicates that EM negatively affects IE, however, CG mechanisms have mixed effects on this relationship. Particularly, larger and more independent boards tend to mitigate the effect of EM on IE, whereas CEO duality significantly amplifies this negative relationship. These findings highlight the critical role of CG in shaping how EM translates into real investment outcomes and offer important implications for governance reforms aimed at improving capital allocation efficiency in emerging markets.

Received: March, 2025

1st Revision: January, 2026

Accepted: March, 2026

DOI: 10.14254/2071-789X.2026/19-1/2

JEL Classification: D02, O17, P31

Keywords: earnings management, investment efficiency, corporate governance, GMM, Vietnam