Ownership structure and earnings management in non-inancial Vietnamese companies listed in Hochiminh Stock Exchange - Vietnam

companies in the stock market in Vietnam is very complex, it is significant and important consideration in the restructuring the stock market in Vietnam. The "Debt ratio" (DEBT) is positively correlated with the Discretionary accrual (DA), coefficient = 0.0837 with p-value = 0.001. This means that the higher the financial leverage, the more it tends to engage into earnings management. This finding is in line with the results of studies such as Charfeddine & Associates (2013). This result can be explained by the PAT Theory (Watts & Zimmerman, 1986) related to the Debt / Equity ratio. The PAT assumed that a debt covenant with restrictive terms would be more secure for creditors because it might restrict managers to invest others’ money in risky projects or to raise more capital to dilute debt. However, the management can loosen the debt ratio by transferring profits from the future to the present. This will increase the financial leverage (debt ratio) and also means that the business is executing more earnings management. The solution is how to limit the violation of debt covenant and thus can provide more reliable information to users. The "Financial performance" (PERF) is positively correlated with discretional accruals (DA), coefficient = 0.9794 with p-value <0,001. This means that when businesses operate more efficiently, businesses will tend to maintain its image and show the sustainability of corporate value. The relationship between PERF and DA is positive, contrary to previous studies by Fathi (2013), Charfeddine, Riahi & Omri (2013), Fathi (2013), Chen et al. (2006); Chen, Cheng & Wang (2010). It can be explained by applying the PAT Theory (Watts & Zimmerman, 1986) related to the bonus plan hypothesis. It is possible to explain why the more efficient the firms are, the more EM will be executed. In bonus plan hypothesis, managers can act for personal interest, maintain the positive results both for attracting investment and receiving the benefits from business’s bonus plan. 881 Investors should be considered this factor as in their investment process because they normally tend to pay attention to high profit businesses instead of the sustainable development ones. The "Duality" (DUAL) results with a p-value of <0.05. The evidence has a significant effect on the DA with a coefficient of 0.0998. As such, the results show that duality has a positive relationship with earnings management. This finding is consistent with the findings of several studies (Fathi, 2013; Rahman & Ali, 2006). In the sample, 37% out of 958 observations are in situation of being duality when CEO and Chairman are the same person, hold both roles. Duality may increases the earnings management of a listed firm. Basically, this is a bad sign of corporate governance in listed companies. Thus, Vietnam needs to strengthen the quality of corporate governance in order to achieve a better corporate management. Since then, it can contribute to the development of the Vietnamese securities market as well as increase the ability in protecting investors, enhancing the role of corporate governance in managing the business operations in general and in earnings management in particular. 5. Conclusions This study used the Jones' original model (1991) in estimating and evaluating earnings management. The regression model was constructed and retrieved results showed that of the four variables related to ownership structure, only Foreign Ownership (OWN2) and Managerial Ownership (OWN4) represent a significant negative relationships with earnings management. They are two important factors in limiting behaviors of earnings management. In addition, some control variables, such as Debt Ratios (DEBT), Financial Performance (PERF) and Duality (DUAL) also have effects on earnings management. The results are expected to be an useful reference for the Vietnamese stock market during the restructuring phase of its ownership and it once again becomes the confirmation of strategy in accelerate the foreign investment ratio in the stock market. Vietnam's stock market is currently having great potential for market transparency and the results of the study also shows that the use of agency theory is appropriate in detecting the relationship between the ownership and the earnings management behavior. The results of this research are expected to be useful for investors, companies, policymakers, audit firms and scholars in the earnings management in Vietnam stock market for building a stronger market, a channel for capital financing for the economy in accordance with the current and future worldwide trends. 6. 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