SHORT-TERM DEBT AND FIRMS' EARNINGS MANAGEMENT CHOICES: THE CASE OF VIETNAM

  • Quang Dang Vang HCMC University of Technology and Education, Ho Chi Minh City
  • Van Hung Tran Vietnam National University of Forestry, Southern Campus, Dong Nai Province

Abstract

The primary purpose of this research is to explore the link between short-term debt and firms' earnings management choices. It focuses on understanding how and when short-term debt will improve or reduce the earnings management activity of companies. Our proxy for real earnings management is based on the measure developed by (Roychowdhury, 2006). Using a sample of listed firms in the period of 2009-2018 in Vietnam, the study determines an important positive correlation between short-term debt and real activities manipulation. Our results further show that firms having lower levels of short-term debt tend to use real earnings management activities, but those that have higher levels of short-term debt are prone to use accrual-based earnings management method rather than altering real activities, inducing an inverted U-shaped relationship between short-term debt and real earnings management.

Author Biographies

Quang Dang Vang, HCMC University of Technology and Education, Ho Chi Minh City

Researcher at HCMC University of Technology and Education, Ho Chi Minh City, Vietnam.

Research interests: education services, education technologies, finance and banking, customers behavior

Van Hung Tran, Vietnam National University of Forestry, Southern Campus, Dong Nai Province

PhD, Lecturer, Faculty of Economics, Vietnam National University of Forestry, Southern Campus, Dong Nai Province, Viet Nam

Research interests: markets of agricultural products, SMEs functioning and government support, ecological economics, environmental issues of economic development, financial management

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Published
2021-03-31
How to Cite
Vang, Q., & Tran, V. (2021). SHORT-TERM DEBT AND FIRMS’ EARNINGS MANAGEMENT CHOICES: THE CASE OF VIETNAM. The EUrASEANs: Journal on Global Socio-Economic Dynamics, (2(27), 47-57. https://doi.org/10.35678/2539-5645.2(27).2021.47-57