Do foreign shareholders improve corporate earnings quality in emerging markets? Evidence from Vietnam

Xuan Vinh Vo and Thi Kim Huong Chu

Cogent Economics & Finance, 2019, vol. 7, issue 1, 1698940

Abstract: Employing a panel dataset of Vietnamese non-financial listed firms, we find that firms with greater foreign shareholdings are aligned with higher quality of financial disclosure. More specially, we find that greater foreign shareholdings are associated with (i) lower earnings management; (ii) more persistent earnings; and (iii) higher informative earnings. On the ground that foreign investors in Vietnam equity market are dominated by institutional investors, the finding from this study supports the spillover hypothesis. This suggests that foreign institutional shareholders with extensive management skills might have ability to assist their invested firms in improving quality of reported earnings.

Date: 2019
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DOI: 10.1080/23322039.2019.1698940

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