The IFRS Paradox: Audit Quality, Not Manipulation Scores, Prices Reporting Risk in Frontier Markets

Manipulation-detection models calibrated in developed markets are routinely applied to frontier economies without validation, yet the institutional conditions that make such tools function as pricing signals are rarely present in those settings. This study provides the first systematic test of the Beneish M-Score and Dechow F-Score as return predictors in Vietnam, a frontier market navigating staged International Financial Reporting Standards (IFRS) convergence. Apparent negative associations between manipulation scores and excess returns under System Generalized Method of Moments (System GMM) do not survive panel fixed effects, Fama–MacBeth, or between-firm estimation. Persistent second-order serial correlation confirms that the GMM signal reflects frontier-market return momentum rather than manipulation pricing. By contrast, Big Four audit quality generates a robust cross-sectional return premium, establishing audit credibility as the operative governance channel where regulatory enforcement is absent. Survival analysis further shows that high-risk firms face substantially elevated exit hazards, demonstrating that reporting risk shapes long-run viability even where short-run pricing is absent. These findings constitute an IFRS paradox: Vietnam has adopted the institutional form of international reporting standards while lacking the informational infrastructure to support detection models that function as reliable pricing signals. Governance infrastructure, not standards convergence, is the operative condition for market discipline in frontier settings.