Is short term debt maturity linked to real earning management?

Liem Nguyen Thanh, Trung Trinh Quoc, Khuong Nguyen Vinh and Thuy Cao Thi Mien
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Liem Nguyen Thanh: Ph.D., University of Economics and Law, Ho Chi Minh City, Vietnam ; and Vietnam National University, Ho Chi Minh City, Vietnam
Trung Trinh Quoc: Ph.D., Assoc. Prof.,University of Economics and Law, Ho Chi Minh City, Vietnam ; and Vietnam National University, Ho Chi Minh City, Vietnam
Khuong Nguyen Vinh: Ph.D., University of Economics and Law, Ho Chi Minh City, Vietnam ; and Vietnam National University, Ho Chi Minh City, Vietnam
Thuy Cao Thi Mien: M.Econ., University of Economics and Law, Ho Chi Minh City, Vietnam ; and Vietnam National University, Ho Chi Minh City, Vietnam

Management, 2022, vol. 26, issue 1, 189-203

Abstract: This paper explores the association between the maturity of short-term debt and real earnings management in the context of an emerging market. We use a panel dataset of listed firms in Vietnam over the period from 2009 to 2017 and employ conventional methods for panel data analysis. Our work contributes by documenting a non-linear relationship between short-term debt maturity and manipulation of earnings. In particular, businesses prefer to refrain from manipulating earnings at low short-term debt maturity levels but are likely to manage them at higher short-term debt maturity levels. Under a battery of robustness evaluations, this result remains unchanged. This means that investors/lenders of firms should be vigilant with the information recorded on financial statements because managers can manage corporate earnings, especially at high short-term debt levels.

Keywords: Real earnings management; short term debt maturity; information asymmetry (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:manmen:v:26:y:2022:i:1:p:189-203:n:8

DOI: 10.2478/manment-2019-0090

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