EFFECTS OF FINANCIAL FACTORS ON THE CHOICE OF ACCOUNTING POLICY TO ADJUST PROFITABILITY: EVIDENCE FROM MANUFACTURING ENTERPRISES LISTED ON VIETNAM STOCK MARKET

Abstract

This study analyzes the influence of financial factors on the choice of accounting
policy to adjust the profitability of listed firms on Vietnam stock market. The research
data was collected from 100 manufacturing companies listed on Vietnam stock
market in the period of 2011-2015. The Friedlan model (1994) was applied to
identify dependent variable DA (adjustably accrued profit) and the independent
variables including Size of enterprise (SIZE); Labor cost-to-revenue ratio (LCRATE);
Risk Factors for Enterprise Bankruptcy (ZSCORE); Income Tax (TAXCOST); Earnings per
share (EPS); Financial Performance (PERF); Debt ratio (DEBT); Accrued Profit (TA). The
analysis results showed that the TAXCOST and ZSCORE variables were negatively
correlated with dependent variable DA (firms tended to use accounting policies to
reduce and "hide" profits); The variables SIZE, LCRATE, EPS, PERF had a positive
relationship with the dependent variable DA (enterprises tended to apply accounting
policies to increase and "overstate" profits).