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Is short term debt maturity linked to real earning management?

Author

Listed:
  • 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)

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.

Suggested Citation

  • 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.
    • Handle: RePEc:vrs:manmen:v:26:y:2022:i:1:p:189-203:n:8
    DOI: 10.2478/manment-2019-0090
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    References listed on IDEAS

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