Earnings Management in Vietnamese Family Firms: A Comparative Analysis with Non-family Firms

This study examines family firms’ earnings quality within the context of Vietnam. Existing literature suggests that principal–principal agency problems are more pronounced in family firms compared to non-family firms. As majority shareholders, family members tend to prioritize both economic and non-economic goals that primarily benefit themselves, often at the expense of minority shareholders. This study reveals a significant and positive association between family firms in Vietnam and two types of earnings management (Real earnings management (REM) and Accrual-based earnings management (AEM)). In Vietnam's transitional economy, where the majority of resources are controlled by the government, family firms face greater uncertainty in their growth prospects. Family firms demonstrate a higher tendency to participate in earnings management tactics to gain access to the necessary resources. Consequently, the accounting quality of earnings reported by Vietnamese family firms is lower compared to non-family firms. These findings hold important implications for investors, regulators, and policymakers who should take them into account when making decisions and formulating policies.