Corporate Governance and Earnings Management in Fraud-Sensitive Firms: Evidence from an Emerging Market

This study explores how ownership structure and board characteristics influence earnings management within fraud-sensitive listed firms on Vietnam’s stock market from 2017 to 2024. In contrast to prior research, which focus on general firm populations, this research uniquely targets 634 firm-year observations identified as high-risk for financial statement manipulation from a dataset of 2,826 firm-year observations. The findings show that foreign and institutional ownership, ownership concentration, and larger board size are associated with lower earnings management. In contrast, revenue growth increases manipulation, while firm size serves as a constraint. In addition to standard regression analysis, this study employs quantile regression to further examine the robustness of governance impacts across different levels of earnings manipulation. This research provides fresh empirical insights within the setting of an emerging market, highlighting how effective corporate governance can reduce the likelihood of earnings manipulation in environments vulnerable to fraud. The results deliver actionable recommendations for business executives, investors, and policymakers aiming to enhance financial transparency and safeguard investor interests.