The impact of accounting conservatism on market value financial performance of listed enterprises in Vietnam

Abstract

In the context of Vietnam's increasingly developed and integrated financial market, understanding the role of accounting conservatism in enhancing financial performance is essential, helping managers make appropriate decisions. This study examines the impact of accounting conservatism on financial performance by market value of 620 listed enterprises on the HOSE and HNX stock exchanges in the period of 2016-2023. Financial performance is measured by Tobin's Q and stock market value, while accounting conservatism is assessed using the asymmetric information model of Basu (1997). The analysis results provide statistical evidence that accounting conservatism has a positive effect on Tobin’s Q but does not influence stock prices. In addition, the study also indicates that state ownership has a negative effect on financial performance, while firm age and foreign ownership have a positive impact on financial performance. In addition, the study reveals that firms exhibited a higher level of accounting conservatism in the post-COVID-19 period compared to the pre-COVID-19 period. Based on the results of this study, the authors recommend that regulatory authorities should develop more specific and detailed guidelines on the accounting conservatism and accounting estimates, in order to reduce subjectivity and ensure the transparency of financial information. Enterprises should apply accounting conservatism at an appropriate level to avoid diminishing the long-term value of assets, while investors are advised to carefully assess the quality of financial information before making decisions.