Impacts of earning management on stock price crash risks on the Vietnames Stock Market

Abstract

Recent global turnoils has been significantly affected the Vietnamese stock markets due to its
lack of efficiency, which can potentially lead to increasing stock price crash risks. This study examines
the impacts of earning management on stock price crash risk for 202 listed companies on the Vietnames
Stock Market from 2013 to 2022. Our empirical analysis reveals a positive association between earnings
management and the subsequent year’s stock price crash risk. Further analysis suggests this effect is
statistically significant only for upward earnings management, leading to reported earnings exceeding actual
profitability. These findings highlight the low efficiency of the Vietnamese stock market, characterized by
limited information transparency and a high proportion of individual investors, who tend to overreact to
earnings information. Based on these results, the study offers policy recommendations for the Vietnamese
stock market.