Journal of Scientific Papers


© CSR, 2008-2019
ISSN 2071-789X

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  • General Founder and Publisher:

    Centre of Sociological Research


  • Publishing Partners:

    University of Szczecin (Poland)

    Széchenyi István University, (Hungary)

    Mykolas Romeris University (Lithuania)

    Alexander Dubcek University of Trencín (Slovak Republic)

  • Membership:

    American Sociological Association

    European Sociological Association

    World Economics Association (WEA)




The effect of financial leverage on real and accrual-based earnings management in Vietnamese firms

Vol. 12, No 4, 2019

Khanh Mai Thi Hoang,


University of Economics and Law, Ho Chi Minh City, Vietnam

Vietnam National University, Ho Chi Minh City, VietnamCity, Vietnam


The effect of financial leverage on real and accrual-based earnings management in Vietnamese firms


Thu Anh Phung *,


Nguyen Tat Thanh University, Ho Chi Minh City, Vietnam


*Corresponding author



Abstract. 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 accrual-based 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.


Received: January, 2019

1st Revision: May, 2019

Accepted: November, 2019


DOI: 10.14254/2071-789X.2019/12-4/18

JEL ClassificationM40, M41

Keywords: firm leverage, accrual-based earnings management, real earnings management, Vietnam