Impact of corporate governance on earnings management – Experimental evidence on listed commercial banks in Vietnam

Abstract

Earnings management is the practice of adjusting accounting policies to change earnings. It affects the earnings of the banking industry, including listed commercial banks. It also reduces the trust of investors because the information provided is unreasonable for the bank system. Corporate governance as a management organization can prevent earnings management in the banking industry. The paper aims to consider the impact of corporate governance on the earnings management of listed commercial banks in Vietnam. The paper uses a time series of ten years from 2012 to 2021. The research uses experiments to test the hypothesis of the model. The result finds three factors positively affect the earnings management of listed commercial banks, including the number of members, professional qualifications, and meetings of the board of directors. The number of members is the strongest influence on earnings management, while the professional qualifications have the lowest effect. The results also demonstrate that listed commercial banks have practiced earnings management in recent years. From there, the paper proposes some policies to prevent the earnings management of listed commercial banks to improve the quality of information.