Browse > Article
http://dx.doi.org/10.13106/jafeb.2020.vol7.no4.71

Effects of Corporate Governance and Earning Quality on Listed Vietnamese Firm Value  

DANG, Hung Ngoc (Accounting Faculty, Hanoi University of Industry)
PHAM, Cuong Duc (School of Accounting and Auditing, The National Economics University (NEU))
NGUYEN, Thang Xuan (Training Department, Postgraduation School, The National Economics University)
NGUYEN, Hoa Thi Thanh (Accounting Department, Economics Faculty, Vinh University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.4, 2020 , pp. 71-80 More about this Journal
Abstract
The paper examines the influence of corporate governance (CG) and earning quality (EQ) on corporate value (FV) of Vietnamese enterprises. The study uses GLS regression and linear structure model using data collected from companies listing on the stock market in Vietnam during 2008-2018, with a total of 2,937 observations. The research results indicate that EQ and CG represented by the Integrated Board of Directors and the Integrated Supervisory Board have a positive effect on FV directly and indirectly. The results show that the Integrated Board of Directors has a positive effect on EQ, whereas the Integrated Supervisory Board has a negative effect on EQ. Based on the research results, we suggest that companies need to strictly comply and implement GC, so to bring down the agency cost and consequently to increase performance. The companies also should establish the Board of Director of a proper size, with financial and accounting specialty, and including women board members. The government also needs to improve the management mechanism asking for firms to prepare and publish financial statements with reliable company information, which could be provided to users. These recommendations are a useful basis to help businesses improve FV via changes in the corporate governance factors in each enterprise.
Keywords
Corporate Governance; Earning Quality; Firm Value; Vietnam;
Citations & Related Records
Times Cited By KSCI : 6  (Citation Analysis)
연도 인용수 순위
1 Brown, L. D., & Caylor, M. L. (2004). Corporate governance and firm performance (pp. 1-52).
2 Carcello, J. V., Hollingsworth, C. W., Klein, A., & Neal, T. L. (2006). Audit Committee Financial Expertise, Competing Corporate Governance Mechanisms, and Earnings Management.
3 Cha, S., Hwang, S., & Kim, Y. (2019). Business Strategy and Overvaluation: Evidence from Korea. Journal of Asian Finance, Economics and Business, 6(4), 83-90.   DOI
4 Core, J. E., Guay, W. R., & Rusticus, T. O. (2006). Does weak governance cause weak stock returns? An examination of firm operating performance and investors' expectations. The Journal of Finance, 61(2), 655-687.   DOI
5 Dang, H. N., Vu, V. T. T., Ngo, X. T., & Hoang, H. T. V. (2019). Study the Impact of Growth, Firm Size, Capital Structure, and Profitability on Enterprise Value: Evidence of Enterprises in Vietnam. Journal of Corporate Accounting & Finance, 30(1), 144-160.   DOI
6 Dang, N. H., Pham, D. C., & Vu, T. B. H. (2018). Effects of financial statements information on firms' value: evidence from Vietnamese listed firms. Investment Management and Financial Innovations, 15(4), 210-218.   DOI
7 Dechow, P. M. (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18(1), 3-42.   DOI
8 Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review, 77(s-1), 35-59.   DOI
9 Ehikioya, B. I. (2009). Corporate governance structure and firm performance in developing economies: evidence from Nigeria. Corporate Governance: The International Journal of Business in Society, 9(3), 231-243.   DOI
10 Francis, J., LaFond, R., Olsson, P. M., & Schipper, K. (2004). Costs of equity and earnings attributes. The Accounting Review, 79(4), 967-1010. https://doi.org/10.2308/accr.2004.79.4.967.   DOI
11 Hashim, H. A., & Devi, S. (2008). Board characteristics, ownership structure and earnings quality: Malaysian evidence. Research in Accounting in Emerging Economies, 8(97), 97-123. https://doi.org/10.1016/S1479-3563(08)08004-3.   DOI
12 Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston, MA: Pitman.
13 Gaio, C., & Raposo, C. (2011). Earnings quality and firm valuation: international evidence. Accounting & Finance, 51(2), 467-499. https://doi.org/10.1111/j.1467-629X.2010.00362.x.   DOI
14 Gulzar, M. A. (2011). Corporate governance characteristics and earnings management: Empirical evidence from Chinese listed firms. International Journal of Accounting and Financial Reporting, 1(1), 133-151. DOI: 10.5296/ijafr.v1i1.854   DOI
15 Hassan, S. U., & Ahmed, A. (2012). Corporate governance, earnings management and financial performance: A case of Nigerian manufacturing firms. American International Journal of Contemporary Research, 2(7), 214-226.
16 Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.   DOI
17 Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management review, 28(3), 383-396. https://doi.org/10.5465/amr.2003.10196729.   DOI
18 Hoang, T. C., Abeysekera, I., & Ma, S. (2018). Board diversity and corporate social disclosure: Evidence from Vietnam. Journal of Business Ethics, 151(3), 833-852. https://doi.org/10.1007/s10551-016-3260-1.   DOI
19 Hutagaol, Y., Valentincic, A., & Warganegara, D. L. (2019). Earnings Quality and Market Values of Indonesian Listed Firms. Australian Accounting Review, 29(1), 95-111.   DOI
20 Kang, H. H., & Liu, S. B. (2014). Corporate social responsibility and corporate performance: a quantile regression approach. Quality & Quantity, 48(6), 3311-3325.   DOI
21 Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of Accounting and Economics, 33(3), 375-400.   DOI
22 Latif, K., Bhatti, A. A., & Raheman, A. (2017). Earnings quality: A missing link between corporate governance and firm value. Business & Economic Review, 9(2), 255-280.   DOI
23 Lipton, L., & Lorsch, J. (1992). A Modest Proposal for Improved Corporate Governance. The Business Lawyer, 48, 59-77.
24 Peasnell, K. V., Pope, P. F., & Young, S. (2005). Board monitoring and earnings management: Do outside directors influence abnormal accruals? Journal of Business Finance & Accounting, 32(7-8), 1311-1346.   DOI
25 Mashayekhi, B., & Bazaz, M. S. (2008). Corporate governance and firm performance in Iran. Journal of Contemporary Accounting & Economics, 4(2), 156-172. https://doi.org/10.1016/S1815-5669(10)70033-3.   DOI
26 Nicholson, G. J., & Kiel, G. C. (2007). Can directors impact performance? A case-based test of three theories of corporate governance. Corporate Governance: An International Review, 15(4), 585-608. https://doi.org/10.1111/j.1467-8683.2007.00590.x.   DOI
27 Nguyen, T. T. (2018). Large Shareholders and Firm Value: Interaction between Power and Incentive to Expropriate. Journal of Economics and Development, 20(2), 65-93. DOI: 10.33301/JED-P-2018-20-02-04.   DOI
28 Pfeffer, J., & Salancik, G. R. (1978). The External Control of Organizations: A Resource Dependence Perspective. University of Illinois at Urbana-Champaign, Academy for Entrepreneurial Leadership, Historical Research Reference in Entrepreneurship. Available at SSRN: https://ssrn.com/abstract=1496213.
29 Radzi, S., Islam, M. A., & Ibrahim, S. (2011). Earning quality in public listed companies: A study on Malaysia exchange for securities dealing and automated quotation. International Journal of Economics and Finance, 3(2), 233-244.
30 Qinghua, W., Pingxin, W., & Junming, Y. (2007). Audit committee, board characteristics and quality of fi nancial reporting: An empirical research on Chinese securities market. Frontiers of Business Research in China, 1(3), 385-400.   DOI
31 Rahman, M. M., Meah, R. M., Chaudhory, N. U. (2019). The Impact of Audit Characteristics on Firm Performance: An Empirical Study from an Emerging Economy. Journal of Asian Finance, Economics and Business, 6(1), 59-69. http://doi.org/10.13106/jafeb.2019.vol6.no1.59.   DOI
32 Ross, S. A. (1977). The determination of financial structure: the incentive-signalling approach. The Bell Journal of Economics, 8(1), 23-40.   DOI
33 Rountree, B., Weston, J. P., & Allayannis, G. (2008). Do investors value smooth performance? Journal of Financial Economics, 90(3), 237-251.   DOI
34 Soliman, M. M., & Ragab, A. A. (2014). Audit committee effectiveness, audit quality and earnings management: an empirical study of the listed companies in Egypt. Research Journal of Finance and Accounting, 5(2), 155-166.
35 Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355-374.   DOI
36 Sucuahi, W., & Cambarihan, J. M. (2016). Influence of Profitability to the Firm Value of Diversified Companies in the Philippines. Accounting and Finance Research, 5(2), 149-153.
37 Vijayakumaran, S., & Vijayakumaran, R. (2019). Corporate Governance and Capital Structure Decisions: Evidence from Chinese Listed Companies. Journal of Asian Finance, Economics and Business, 6(3), 67-79. https://doi.org/10.13106/jafeb.2019.vol6.no3.27.   DOI
38 Alves, S. (2014). The effect of board independence on the earnings quality: evidence from portuguese listed companies. Australasian Accounting, Business and Finance Journal, 8(3), 23-44. http://dx.doi.org/10.14453/aabfj.v8i3.3   DOI
39 Ahmed, S. (2014). Board of director characteristics and earnings management in Malaysia. GSTF Journal on Business Review, 2(4), 94-99. doi: DOI: 10.5176/2010-4804_2.4.255.
40 Al-Othman, L. N., & Al-Zoubi, M. N. (2019). The Impact of the Board of Directors Characteristics on Earnings Quality of Listed Industrial Companies on the Amman Stock Exchange. Academy of Accounting and Financial Studies Journal, 23(1), 1-16.
41 Arora, A., & Sharma, C. (2016). Corporate governance and firm performance in developing countries: evidence from India. Corporate Governance, 16(2), 420-436.   DOI
42 Bhattacharya, U., Daouk, H., & Welker, M. (2003). The world price of earnings opacity. The Accounting Review, 78(3), 641-678.   DOI
43 Bitner, L. N., & Dolan, R. C. (1996). Assessing the relationship between income smoothing and the value of the firm. Quarterly Journal of Business and Economics, 35(1), 16-35.
44 Black, B. S., Jang, H., & Kim, W. (2006). Does corporate governance predict firms' market values? Evidence from Korea. The Journal of Law, Economics, and Organization, 22(2), 366-413.   DOI
45 Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40(2), 185-211. https://doi.org/10.1016/0304-405X(95)00844-5.   DOI
46 Vo, T. T. A., & Bui, P. N. K (2017). Impact of Board Gender Diversity on Firm Value: International Evidence. Journal of Economics and Development, 19(11), 65-76. DOI: 10.33301/2017.19.01.05.
47 Waweru, N. M., & Riro, G. K. (2013). Corporate governance, firm characteristics and earnings management in an emerging economy. Journal of Applied Management Accounting Research, 11(1), 43-64.