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The impact of short-term debt on accruals-based earnings management – evidence from Vietnam

Author

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  • Trinh Quoc Trung
  • Nguyen Thanh Liem
  • Cao Thi Mien Thuy
  • Mohammed M. Elgammal

Abstract

This study seeks to examine the relationship between short-term debt maturity and accruals-based earnings management using a sample of listed firms in Vietnam from 2010–2017. The extant literature remains under-explored on the impact of short-term debt on accruals-based earnings management at low and high levels of short-term debt. We further dissect the impact of the interaction between the growth opportunities and short debt maturity on accruals-based earnings management. Our findings provide evidence suggesting that short-term debt maturity is likely to exert a desirable impact in lowering earnings management at low levels of short-term debt, while at high levels it tends to increase earnings manipulation, demonstrating a U-shaped relationship. Furthermore, we show that growth opportunities moderate the impact of short debt maturity on earnings management. Specifically, the U-shaped pattern between short-term debt and earnings management is pronounced for firms with low growth opportunities, while for high-growth counterparts that pattern weakens.

Suggested Citation

  • Trinh Quoc Trung & Nguyen Thanh Liem & Cao Thi Mien Thuy & Mohammed M. Elgammal, 2020. "The impact of short-term debt on accruals-based earnings management – evidence from Vietnam," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1767851-176, January.
    • Handle: RePEc:taf:oaefxx:v:8:y:2020:i:1:p:1767851
    DOI: 10.1080/23322039.2020.1767851
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    Cited by:

    1. Liem Nguyen Thanh & Trung Trinh Quoc & Khuong Nguyen Vinh & Thuy Cao Thi Mien, 2022. "Is short term debt maturity linked to real earning management?," Management, Sciendo, vol. 26(1), pages 189-203, January.

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