Master Thesis Master Program, Department of Global Business College of Business Chinese Culture University

Transcription

1 Master Thesis Master Program, Department of Global Business College of Business Chinese Culture University Ownership Structure, Board Characteristics and Earnings Management in Vietnam Advisor: Jia-Jiann Chuang, Ph.D. Graduate Student: Tran Thi Thanh Thao June 2016

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3 Ownership Structure, Board Characteristics and Earnings Management in Vietnam Student: Tran Thi Thanh Thao Advisor: Prof. Jia-Jiann Chuang Chinese Culture University ABSTRACT This study examines the effect of ownership structure and board characteristics on earnings management for Vietnamese listed firms during the period Earnings management is measured by the absolute value of discretionary accruals that are estimated from the Modified Jones Model. Four types of ownership are investigated including state ownership, managerial ownership, foreign ownership and blockholder ownership. The board characteristics examined are board independence, board size, CEO duality, financial expertise and board meetings. The multiple linear regression is used in this study to test the hypotheses. After controlling for firm size, leverage and performance, we found that earnings management is negatively related to state ownership, managerial ownership and foreign ownership. The findings of this study reveals that the positive relationship between the presence of CEO duality and the level of earnings management. Also, examination of the data shows that board meetings frequency is associated with a lower likelihood of earnings management. Keywords: earnings management, ownership structure, board characteristics. iii

4 ACKNOWLEDGEMENT Completion of thesis has been my ultimate goal in master degree. During all my studying and researching, without support from others, the huge dream in my life couldn t come true. First of all, I would like to express my deepest gratitude to my advisor Professor Jia-Jian Chuang for his expertise, exceptional guidance and valuable suggestion. I have been fortunate to have an advisor who gave me the freedom to explore on my own, and is always willing to support for every step of my research when I am in need. Also, I would like to thank Professor Jinn-Yang Uang for his comments for my three chapters. In addition, I would like to express my sincerely thanks to Chinese Culture Uinversity for offering me the scholarship to pursuit Master Degree in Taiwan. I also would like to deliver my thanks to all professors at Department of Global Business, Department of Finance and Banking, Department of Accounting, Department of International Trade who kindly share knowledge during my studying. Besides, I would like to say thank all staffs at Office of International Affairs for assistance during my stay in Taiwan. Moreover, I would like to thank my beloved friends, Annie, Katie, Lenna, Katy, Emily, Summer, Ivy, for being my companions and sharing fun memories in Taiwan. Last but not least, I would like say thank to my family for spiritual supports and being always beside me in both good time and hard time. Tran Thi Thanh Thao 15 May 2016 iv

5 CONTENTS ABSTRACT... iii ACKNOWLEDGEMENT... iv LIST OF TABLES... vii LIST OF FIGURES... viii CHAPTER ONE INTRODUCTION Research Background and Motivations Research Purposes Research Framework and Procedures Scope of the Study The Structure of the Study... 5 CHAPTER TWO LITERATURE REVIEW Earnings Management Ownership Structure and Earnings Management State Ownership Managerial Ownership Foreign Ownership Blockholder Ownership Board Characteristics and Earnings Management Board Independence Board Size CEO Duality Financial Expertise Board Meetings CHAPTER THREE RESEARCH DESIGN AND METHODOLOGY Data and Sample Selection Definition of Research Variables Dependent Variable Development of Discretionary-Accruals Models Measurement of Earnings Management Explanatory Variables v

6 Measurement of Ownership Structure Measurement of Board Characteristics Control Variables Statistical Analysis Method CHAPTER FOUR RESEARCH RESULT AND ANALYSIS Descriptive Statistic Correlation Analysis Multiple Regression Analysis Additional Test CHAPTER FIVE CONCLUSION AND SUGGESTION Research Conclusion Research Limitations and Suggestions for Further Research REFERENCE vi

7 LIST OF TABLES Table 3-1 Sample Selection Table 3-2 Sample Distribution Table 3-3 Definition of Variables Table 4-1 Descriptive Statistic Table 4-2 Corelation Matix Table 4-3 Regression Result Table 4-4 Regression Results Using Discretionary Accruals Estimated by Alternative Models vii

8 LIST OF FIGURES Figure 1-1 Research Framework and Procedures... 4 viii