THE IMPACT OF EXCHANGE RATE DIFFERENCES ON FINANCIAL STATEMENTS ON STOCK MARKET PRICE: A CASE OF NON-FINANCIAL LISTED COMPANIES CHU THI THU THUY, VU THI KIM LAN The research clarified the impact of exchange rate differences on financial statements on market price per share of nonfinancial companies listed on the Vietnam’s stock market The research sample was 154 non-financial companies which had occurred exchange rate differences in period of 2009 -2017 The panel regression is used with supporting of Stata 14 software The result of research was pointed out that the exchange rate differences on financial statements affected significantly the non – financial company’s stock market price in period of 2009-2017 Moreover, the research also proved that the change in accounting policy in period of 2009-2017 is a main factor which affects the level and sign impact of exchange rate differences on market price per share Key words: Exchange rate differences, non-financial companies, market price per share, the Vietnam’s stock market Introduction Nowadays, most of companies have transactions which related to exchange rate differences because of the integration of world’s economy Therefore, the information of exchange rate differences reported on the financial statement (FC) is one of important information which investors use to analysis a company’s financial situation and assess the company’s value The exchange rate differences on FC play a significant role in the change in market price per share (MP), so in many decades, there are a vast of researches focused on analyzing the impact of exchange rate profits (losses) on MP The researches implemented in distinction contexts and periods have pointed out the different results related to sign and level effects In period of 2009-2017, Vietnam has had the important change in the accounting policies, especially in the accounting policy of exchange rate differences The change in accounting policy affects considerably a company’s financial income and as a result, it brings into relation with the determining in MP which investors decide to buy or sell in these periods On the base of theory and practice, the objective of this research is given to prove the impact of exchange rate differences on MP of non-financial companies listed on the Vietnam’s stock market and analyses the effects of accounting policy change on the investor’s decisions Literature review Overview of researches In many recent decades, there is a variety of 14 researches which centered on analyzing the impact of exchange rate differences on FCs on MP The researches of Makin (1978), Pourciau and Schaefer (1995), Salatka (1989), Ziebart and Kim (1987), Kim and Ziebart (1991) elucidated that the investors reacted negatively upon the application of the Statement of financial Accounting Standards no (SFAS 8) or the increase in profits (losses) of exchange rate differences causes the decrease in MP The research of Louis (2003) and Pinto (2005) were pointed out that the exchange rate differences had negative relationship with MP Fluctuation in exchange rates will affect the value of a foreign subsidiary primarily because of the impact of exchange rates on production costs When the local currency appreciates, production costs rise In addition, appreciation of local currency makes a foreign subsidiary harder to sell its goods in an open market because foreign goods become cheaper Therefore, it may have to reduce sales price to remain competitive Moreover, it cannot adjust easily its labor costs, so its labor costs are still higher As a result, the appreciation of local currency is not only to cause in decreasing profit margins but also company’s value (Louis, 2003) The researches of Ohlson (1995), Bartov and Bodnar (1995), Bazaz and Senteney (2001), Benjamin et al (1986), Brown and Brandi (1986), Conover (1988), Arey(1986), Soo and Soo (1994), Bartov (1997), Redman et al (2013), Thanh, Le Vu Ngoc et al (2015) proved that the exchange rate differences affected significantly and positively MP The relationship between the change in MP and exchange rate REVIEW of FINANCE - Issue 3, 2019 differences was studied by Redman et al (2013) The research sample was used in their research, was 1851 American companies in period of 2010 -2011 They found that if the profits (losses) of exchange rate differences increased, MP would rise Thanh, Le Vu Ngoc et al (2015) applied Ohlson’s model to test the relationship between exchange rate differences and MP of companies listed on the Vietnam’s stock market in period of 2009-2011 They concluded that investors reacted positively to profits (losses) recorded on the Income Statement but did not react profits (losses) recorded on the balance sheet The increase in profits of exchange rate differences makes investor’s expectation increase This makes MP rise The weak impact of exchange rate differences on MP were pointed out in a variety of previous researches such as the research of Dukes (1978), Shank et al (1979), Garlicki et al (1987), Rezaee et al (1993) The exchange rate differences affect insignificantly MP because of two main reasons: Firstly, the proportion of profits of exchange rate differences on a company’s income is not high, the transactions relating to exchange rate occurs irregularly Secondly, the fluctuation of exchange rate affects monetary assets and foreign debts but not affects non-monetary assets If a company uses swap contracts to hedge risks for non-monetary assets and foreign debts, the translation of profits (losses) of exchange rate differences will not affect a company’s value in the future Theoretical frameworks The agency theory The agency theory was mentioned by Ross (1973) and then was developed by Jensen and Meckling in 1976 This is a theory of the governance of a company which is based on the conflicts of interest between the company’s owners and its managers The conflicts of interests always occur because the owners and managers have different interests and objectives The agency theory which is applied for explaining why managers choose different exchange rates in recording transactions in order to increase accounting income and in translating FCs to its country’s currency The manager’s choice of exchange rate in recognition will affect the exchange rate differences… The signaling theory Signaling theory is useful for describing behavior when two parties access different information The signaling theory is applied to explain the case which the good information of exchange rate differences on FCs is provided by managers in order to send to positive signals about a company’s financial performance The information which is represented on FCs is different when managers decide to choose different accounting policies to record transactions Hence, in case of exchange rate differences on FCs, the accounting policies which bring the best benefits to company’s financial performance will be applied for recording transactions and translating FCs As a result, the positive relationship between the exchange rate differences and MP is supported by the signaling theory Theoretical research model In order to prove the impact of exchange rate differences on FCs on MP and to explain the change in accounting policies affecting investor’s decisions, theoretical research model is built as followings: Model 1: Model is used to clarify the impact of exchange rate differences on FCs on MP in period of 2009-2017 LnPi = α0 + α1*BVPSi + α2*EPS1i + α3*CLTG1i+ α4*CLTG2i + α5*SIZEi +ei (1) Model 2: Model is used to explain the change in accounting policies affecting investor’s decisions in period of 2009-2017 Model 2.1: The period is from 2009 to 2013 LnPi = α0 + α1*BVPSi + α2*EPS1i + α3*CLTG1i+ α4*CLTG2i + α5*SIZEi +ei (2.1) Model 2.2: The period is from 2012 to 2014 LnPi = α0 + α1*BVPSi + α2*EPS1i + α3*CLTG1i+ α4*CLTG2i + α5*SIZEi +ei (2.2) Model 2.3: The period is from 2015 to 2017 LnPi = α0 + α1*BVPSi + α2*EPS1i + α3*CLTG1i+ α4*CLTG2i + α5*SIZEi +ei (2.3) - Dependent variable (LnPi): Dependent variable is LnP which is calculated by logarithm daily closed average price from December 31 to March 31 The daily price from 31/12 to 31/3 is chosen because according to the Circular No.155/2015/TT-BTC, each public company must disclose its audited annual FCs within 10 days, from the date on which the audit organization signs the audit report provided not exceeding 90 days, from the end date of the financial year Hence, at the date of March 31, investors obtained the sufficient information about a company’s financial situation The price which is used to calculate the average price is the closed price - Independent variables: Independent variables consist of exchange rate differences per share (CLTG1 and CLTG2), Book value per share (BVPS), Earnings per share which not include profits or losses of exchange rate (EPS1), firm size 15 - Exchange rate differences per share (CLTG1 and CLTG2): CLTG1 - Profits or losses of exchange rate per share are represented on the Income Statements and CLTG2 - Profits or losses of exchange rate per share are represented on the balance sheets - Book value per share (BVPS): BVPS is calculated by the average shareholders’ equity minus preferred stock equity and then divided by the number of outstanding common stocks - Earnings per share before profits or losses of exchange rate (EPS1): EPS1 is calculated by net income minus exchange rate differences and then divided by the number of outstanding common stocks - Size of company (SIZE): SIZE is calculated by logarithm the average total assets On the base of literature review, it is stated that the impact of exchange rate of differences on MP in the different research context is incompatible Therefore, the first couple of hypotheses given as followings: H01: Exchange rate differences affect insignificantly MP H02: Exchange rate differences affect significantly MP In addition, Vietnam has been three changes in the accounting policies in period of 2009-2017 The changes in the accounting polices affected directly the information of FCs This is main information which investors use to analysis financial situation and company’s prospect Somehow, the second couple of hypotheses given as followings: H02: Exchange rate of differences on FCs in different periods has same impact on MP H12: Exchange rate of differences on FCs in different periods has not same impact on MP Methodology The research sample is non-financial companies listed on the Vietnam’s stock market in period of 2009-2017 These are companies listed on the Hanoi Stock Exchange and Ho Chi Minh Stock Exchange Companies operating in Bank, Finance and Insurance sector or have not enough FC in period of 20092017 or have not transactions related to exchange rate, would be not included in the research sample Moreover, these companies must have finacial year which starts at January 1st and ends at December 31st Therefore, the final sample is 154 companies listed on the Vietnam’s stock market in which 53 companies are listed on the Hanoi Stock Exchange and 101 companies are listed on the Ho Chi Minh Stock Exchange To prove the research hypotheses, some 16 research methods are used which consists of descriptive statistical analysis, auto-correlation test, multi-collinearity test, variance test, Ramsey’s test, Hausman’s test and panel regression analysis with support of Stata 14 software Results and discussion Descriptive Statistical analysis Table pointed out the characteristics of sample including mean value, value, max value and standard deviation of dependent and independent variables Firstly, the max value and the value of LnP1 are 12.35 and 7.48 respectively The LnP1 mean is 9.77 and LnP1 standard deviation is 0.85 It means that most of companies have MP which is smaller than their average price in period of 2009-2017 and the dispersion of MP is large Secondly, the mean value of EPS1 is VND 2,996.251 per share and its standard deviation is VND 3,229.707 per share This stated that the data has high dispersion The max value of EPS1 is VND 36,574.1 per share and the value of EPS1 is VND -10,127.84 per share EPS1 value is able to be negative or positive because it is calculated from earnings after taxes Thirdly, the mean value of CLTG1 is VND -78.09227 per share This means that exchange rate difference management of Vietnam’s companies in period of 2009-2017 is inefficient Most of companies obtain highly negative exchange rate differences in which the value of exchange rate differences is VND – 2,789.467 per share The standard deviation of CLTG1 is VND 460.2253 per share and the max value is VND 3,648.538 per share It stated that the dispersion of CLTG1 is high and most of companies have CLTG1 which are smaller than their CLTG1 mean value Fourthly, the average of CLTG2 is VND 5.826144 per share and its standard deviation is VND 261.5589 per share Its value and man value are VND-2,473.079 per share and VND 3,382.074 per share respectively It indicated that the CLTG2 has high dispersion Fifthly, the mean TABLE 1: DESCRIPTIVE STATISTICS IN PERIOD OF 2009-2017 Variable Obs Mean Std Dev Min Max LnP1 1,386 9.773623 0.85119 7.482494 12.35187 EPS1 1,386 2,996.251 3,229.707 -10,127.84 35,838.5 CLTG1 1,386 -78.09227 460.2253 -2,789.467 3,648.538 CLTG2 1,386 5.826144 261.5589 -2,473.079 3,382.074 SIZE 1,386 27.31945 1.265198 24.23 32.21053 BVPS 1,386 18,761.08 8,508.875 1,667.006 84,147.63 Source: Calculated from collected data with support of Stata 14 software REVIEW of FINANCE - Issue 3, 2019 value of SIZE is 27.31945 and its standard deviation is 1.265198 The company which has the largest size is Vingroup joint – stock company in 2009 and the smallest company is Sai Gon Hotel joint – stock company in 2017 Sixthly, the average value of BVPS is obtained highly (VND 18,761.08 per share) with its high dispersion of VND 8,508.875 per share The lowest BVPS is Phuong Nam joint stock company in 2017 (VND 1,667.006 per share) and the highest BVPS is Coteccons building joint – stock company in 2017 (VND 84,147.63 per share) In conclusion, with analyzing descriptive statistics of variables, it indicated that the data has highly reliable and so the data is suitable to analyze practical regression model Pearson’s Correlation matrix TABLE 2: PEARSON’S CORRELATION MATRIX OF VARIABLES IN PERIOD OF 2009-2017 LnP1 EPS1 970** CLTG1 706** CLTG2 099** SIZE -.005 BVPS 203** Therefore, if CLTG1 tends to ascend, it will provide positive information about a company’s ability of financial management and its cashflow This make MP increase because of expectation increment of investors CLTG2 and MP: The result of Table was stated that CLTG2 has a significant and positive impact on LnP1 at the 1% level but the relationship between CLTG1 and LnP1 is not tight with the correlation coefficient of 0.099 Size and MP: According to Table 2, the significant value of size is larger than percent, it means that the impact of size on LnP1 is insignificant BVPS and MP: BVPS has a significant and positive effect on LnP1 From view of theoretical and practical standpoint, a company has high financial performance, it will have high BVPS The higher BVPS value will affect considerably psychology of investors and this makes MP tend to change positively Hausman’s test, multicollinearity test, autocorrelation test and variance test Hausman’s Test TABLE 3: HAUSMAN’S TEST FOR MODEL AND MODEL 2009-2017 2009-2011 2012-2014 “*” at significant level of 5%; “**” at significant level of 1% Source: Calculated from collected data with support of Stata 14 software Table stated that dependent variables excepting for SIZE variable are in relationship with LnP1 at the significant level of percentage EPS1 and MP: In accordance with Table 2, it manifested that EPS1 affects significantly LnP1 at the significant value of percentage The relationship between EPS1 and LnP1 is strong because of high correlation coefficient (their coefficient of 0.97) The impact of EPS1 on LnP1 is positive or if a company has high EPS1 value, it will have high LnP1 In addition, if a company increases EPS1, its price will tend to rise When EPS1 increases, shareholders will have an opportunity to receive more dividends Otherwise, according to the signaling theory, the increase in EPS1 is good signal about a company’s financial situation and its growth prospect in the future As a result, current shareholders want to hold its stocks longer whereas investors will have to pay more money if they want to become the new shareholders of company This causes MP rise up CLTG1 and MP: According to Table 2, the profit (loss) from the exchange rate difference has a significant and positive effect on LnP1 at the percent level It can be seen that CLTG1 contributes to the increase or decrease in earnings after taxes 2015 2017 Prob>chi2 0.0714 0.0000 0.0120 0.0617 Model FE RE RE FE Source: Calculated from collected data with support of Stata 14 software According to Table 3, Prob> chi2 of model and model in period of 2015-2017 are 0.0714 and 0.0617 respectively which are large than the significant level of 5% It means that the H0 hypothesis is rejected and accepted the H1 hypothesis or RE model is more suitable to analyze regression However, Prob> chi2 of model in both period of 2009 -2011 and 2012-2014 are smaller than the significant level of 5% Therefore, TABLE 4: MULTICOLLINEARITY TEST, AUTOCORRELATION TEST AND VARIANCE TEST 2009-2017 20092011 20122014 2015 2017 0.0000 0.0000 0.0000 Auto-correlation test Prob>chi2 0.0000 Conclusions Models have autocorrelation Variance Test H0: sigma(i)^2 = sigma^2 for all i Prob>chi2 Conclusions 0.0000 0.0008 0.0000 0.0000 sigma(i)^2 and sigma^2 for all i are different Source: Calculated from collected data with support of Stata 14 software 17 RE model is more efficient in regression analyzing Multicollinearity test, autocorrelation test and error variance test According to Table 4, Prob >chi2 coefficients are smaller than 5%, so Ho hypothesis is rejected and is accepted H1 hypothesis It means that both model and model have auto-correlation and the different errors variance The research result also shows, independent variables in regression models are not correlated because all VIF coefficients are smaller than and all Tolerance coefficients are larger than 0.1 Regression Analyzing Analyzing the impact of exchange rate differences on MP in period of 2009 -2017 To analyze the effect of exchange rate differences on MP, the panel data regression method is used in this research FGLS methods are used because there is autocorrelation and different errors variance in this regression model The result of regression is presented in Table The regression result shows that, the sig coefficient of model (Prob>chi2 =0.000) is smaller than percent, it indicates that at least one coefficient of independent variables is not equal zero or the model is suitable to explain the change of MP in context of Vietnam’s stock market Additionally, the coefficient of adjust R square is 0.5065, meaning that the 50.65 percent of MP changes are due to independent variables and 49.35 percent of the changes in MP are caused by other factors which are not given in the research model On the other hand, in accordance of Ramsey’s test, the F coefficient is 28.22 and the P-value approximate to 0, so the model does not need to add variables or the model is perfectly suitable to explain the relationship between exchange rate differences and MP of non-financial joint stock companies listed on the Vietnam’s stock market The regression result shows that most of independent variables (except for CLTG2) have significant effects on LnP1 with the Sig value (P>z) less than percent The impact of independent variables on dependent variable is positive because their coefficients are greater than The effect of independent variables on MP is explained in details as follows: - The impact of exchange rate differences on MP: The research result indicated that investor’s reaction is positive with exchange rate differences recorded on the Income Statement and negative with exchange rate differences presented on the balance sheet The coefficient of CLTG1 is 0.00014, meaning that when 18 CLTG1 increases by VND per share, MP will rise by 0.00014 percent The research result is identical with the results of previous researches consisting of the research of Soo and Soo (1994), Bartov (1997), Redman et al (2013), Thanh, Le Vu Ngoc et al (2015) The research result is appropriate to both theory and practice in finance Firstly, the positive effect of CLTG1 on MP is abided by the signaling theory The good signals of financial performance make investors’ expectations of the company’s growth prospect increase, leading to an increase in the MP trend In fact, in period of 2009-2011, some of companies tend to choose to apply flexibly accounting policy for transactions related to exchange rate or translating FC – applying VAS10 or applying Circular No 201 - to obtain positive profitability of exchange rate differences on FCs In period of 2012-2014, the unanimous application for Circular No 179 helps managers choose the most beneficial exchange rate in recording and presenting exchange rate differences on FCs In the period of 2015-2017, according to Circular No 200 and Circular No.53, companies are allowed to choose exchange rate in recording and presentation, so the most profitable exchange rate is chosen in order to enlarge profit margin of exchange rate and reduce exchange rate losses Specially, according to the collected data in 2015-2017, the number of companies with exchange rate difference is greater than 0, increasing from 55 companies in 2014 to 89 companies in 2017 The research results also point out that the exchange rate differences recorded in shareholder’s equity affect insignificantly MP - The impact of EPS1 on MP: EPS1 has a significant and positive effect on MP at significance level of percent with its coefficient of 0.00010 A company has higher EPS1, it will bring more profits to shareholders Therefore, its current shareholders will hold its stocks longer, the investors who want to be shareholders, will be willing to spend more money to buy the company’s stock As a result, the MP of companies with higher EPS1 tends to be greater than other companies Otherwise, if a company is profitable, it will retain a proportion of profits to reinvest and expand its business Conversely, this expansion of business will increase its profits and cashflows in the future Finally, a company with high EPS1 will provide a good signal on financial situation, which makes the expectation of investors increase, leading to a rise in its MP - The impact of company’s size on MP: The results of Table show that the scale of the company has a significant impact on MP with P- value of 0.000 Its REVIEW of FINANCE - Issue 3, 2019 regression coefficient is positive (0.05205), indicating an increase in the size of the company will lead to an increase in MP In fact, large companies are better able to manage cash flow than small companies Moreover, large companies can invest in long-term projects, so cash flow that investors which are able to receive, is often more stable and sustainable than small companies Moreover, big companies are also attractive to good managers, so it brings more benefits than small companies - The impact of BVPS on MP: BVPS is the book value of assets of ordinary shareholders From the theoretical viewpoint, when BVPS tends to increase, the book value of the company will increase The increase in BVPS of non-financial companies listed on the Vietnamese stock market is mainly due to the increase in accumulated retained earnings This demonstrates the effectiveness of financial management including financial efficiency and reasonable dividend policy Therefore, a company with high BVPS usually has and maintains high MP in the stock market Analyzing the impact of exchange rate differences on MP in each period of change in accounting policies To analyse the impact of exchange rate differences on MP, the panel regression is used in this research Since the model has auto-correlation and not equal error variance, FGLS method (Cochrane-Orcutt) is used The regression results are shown in Table Specific results are explained as follows: Firstly, the coefficients of adjusted R-square in models are quite different In the period of 20092011, 32.4% of change in MP is due to independent variables, while in the period of 2012-2014, independent variables explain 64.12% of change in MP However, in the last period (2015-2017), the coefficient of adjusted R-square decreases to 49.32% In general, the changes in accounting policy affect positively MP of non-financial joint stock companies listed on Vietnam’s stock market Secondly, the ddifferent impact of CLTG1 through all stages is quite clear In the first phase (2009-2011), the change of CLTG1 did not affect significantly MP However, in the remaining two periods (2012-2014 and 2015-2017), CLTG1 has a significant impact on changing of MP at the P-value of 5% Moreover, this effect is positive with their regression coefficients of 0.000180 & 0.00011 respectively In two periods of 2012-2014 and 2015-2017, the positive changes in accounting policy make profits (losses) of exchange rate presented on Income Statements more accurately than the previous periods Therefore, the quality of information about the exchange rate differences is improved and therefore it becomes one of the important information that investors analyze before deciding to buy or sell stocks Finally, the effect of CLTG2 on MP in phases is different in both signs (+/-) and level of impact In the period of 2009-2011, CLTG2 had a significant influence on MP at P-value of 5% In this period, companies are allowed to apply flexibly both VAS10 and Circular No 201 to record and present transactions relating to exchange rates, resulting in concealment and fraudulent in recording profits or losses of exchange rate differences on income statements In this period, CLTG2 has a negative effect on MP with its regression coefficient of -0.00010 In period of 2012-2014, when CLTG2 increases by VND per share, MP will increase by 0.000213% With applying Circular No 179, gains or losses of exchange rate differences presented in Account No 413 is more accurate than the previous periods In addition, the information on profits or losses of exchange rate differences reflected on FCs is more transparent and accurate because of the changes in exchange rate used to record transactions However, in this period, there is transferring of policy between two periods, so profits (losses) of exchange rate differences recorded in Account No 413 of some companies are considered to be not accurately reflected As a result, the impact of CLTG2 on MP is positive In final period (2015-2017), with the change in the regulations of recording, presenting and translating exchange rate differences in Circular No 200 and Circular No 53, the information of exchange rate differences on FC is reflected more exactly than previous period The changes in Circular No 200 and Circular No 53 are consistent with the main contents of the international accounting standards and American accounting standards Conclusions and suggestions Some research results are pointed out in this research as follows: During the study period from 2009 to 2017, exchange rate difference on Income Statement has a significant and positive impact on MP When exchange rate difference on Income Statement increases, the MP of non-financial companies listed on Vietnam’s stock market will increase In the other hand, exchange rate differences on the Balance Sheet affect insignificantly MP because the percentage of exchange rate difference in total equities is quite small In practice, exchange rate difference is the income 19 TABLE 6: THE REGRESSION RESULTS OF MODEL 2009-2011 2012-2014 2015-2017 EPS1 0.00003** 0.000157** 0.00009** CLTG1 0.00005 0.000180** 0.00011** CLTG2 -0.00010** 0.000213** -0.00022** SIZE -0.11113** 0.130847** 0.10109** BVPS 0.00003** 0.000024** 0.00002** _cons 12.18853** 5.199072** 6.36871** Prob > chi2 0.0000 0.0000 0.0000 Adjust R-Square 0.3240 0.6421 0.4932 F 29.90 36.47 68.60 Prob > F 0.0000 0.0000 0.0000 Ramsay test “*” at significance level of 5%; “**” at significance level of 1% Source: Calculated from collected data with support of Stata 14 software of a company, so exchange rate differences must be recorded in the items of the Income Statement, especially the loss of exchange rate The impact of exchange rate differences on MP in the periods of changes in accounting policy is quite different This is expressed through the coefficient of the adjusted R square and the sign of the regression coefficient The study has made it clear that exchange rate differences on FCs will be more accurate when they are recorded according to Circular No 200 and Circular No 53 Based on the research results, some recommendations are supposed as follows: - For investors, the MP of non-financial companies listed on the Vietnam’’s stock market is affected by the exchange rate difference on the FCs Therefore, before deciding to buy or sell a company’s stock with a transaction involving exchange rates, investors should consider the exchange rate difference information The change in profit or loss of the exchange rate reflects the effectiveness of a company’s exchange rate policy including selecting the exchange rate in recording transactions and presenting FCs or in using derivative instruments to prevent the risk of exchange rates This makes the company’s value tend to increase in the future - For non-financial companies listed on Vietnam’s stock market, the objective of financial management is to maximize the value of company or increase MP On the basic of signaling theory, managers should focus on two major issues related to exchange rate, including the choice of exchange rate to record transactions, present and translate the FCs and the selection of derivative instruments to hedge risks of 20 exchange rate - For the government, exchange rate difference has a significant impact on MP, which affects the stability and sustainability of Vietnam’s stock market The research results show that the change in accounting policy has different effects on MP of non-financial companies listed on the Vietnamese stock market The current regulations are applied, including VAS 10, Circular No 200 and Circular No 53, which are suitable for recording transactions related to exchange rates and translating FCs and similar to international accounting standard These regulations should be applied stably, avoiding changes in accounting policies or applying two rules in a similar period like in the past In addition, the Ministry of Finance should limit issuing many regulations on exchange rate differences Many regulations can lead to different accounting policy choices that make the company’s financial information inaccurate References: Brown, B C & Brandi, J T (1986), ‘Security price reactions to changes in foreign currency translation standards’, Journal of Accounting, Auditing & Finance 1, 185-205; Conover, T L (1988), ‘An empirical investigation of the effects of the accounting treatment of foreign currency translation on management actions in multinational firms’, Ph.D dissertation, Texas A&M University, College Station Garlicki, T D., Fabozzi, F J & Fonfeder, R (1987), ‘The Impact of Earnings Under FASB 52 on Equity Returns’, Financial Management, 16(3), 36-44; Jensen, M C & Meckling, W H (1976), ‘Theory of the firm: Managerial behavior, agency costs and ownership structure’, Journal of Financial Economics, 3(4), 305-360; Pinto, J A (2005), ‘How Comprehensive is Comprehensive Income? The Value Relevance of Foreign Currency Translation Adjustments’, Journal of International Financial Management and Accounting, Vol 16, No 2, pp 97-122; Redman, A L., Gullett, N S & Stover, R (2013), ‘Foreign exchange effects and share prices’, International Journal of the Academic Business World (Spring), 7(1), 51-58; Thanh, Le Vu Ngoc, Tu, Dinh Ngoc and Tuan, Doan Ngoc (2015), ‘The relationship between stock market price and exchange rate differences from revaluation of foreign currency transactions’, Journal of Asian Business and Economic Studies, 26(8),71-91; Vietnamese Ministry of Finance (2014), ‘Circular No 200/2014/TT-BTC on guides for accounting policies for enterprises’, promulgated and publicized at 22nd December, 2014 Author’s information: Chu Thi Thu Thuy Ph.D, Vu Thi Kim Lan MA Thang Long University, Ha Noi, Vietnam Email: thuyct2702@gmail.com, vukimlan@gmail.com ... 22nd December, 2014 Author’s information: Chu Thi Thu Thuy Ph.D, Vu Thi Kim Lan MA Thang Long University, Ha Noi, Vietnam Email: thuyct2702@gmail.com, vukimlan@gmail.com ... negative or positive because it is calculated from earnings after taxes Thirdly, the mean value of CLTG1 is VND -78.09227 per share This means that exchange rate difference management of Vietnam’s companies... the panel data regression method is used in this research FGLS methods are used because there is autocorrelation and different errors variance in this regression model The result of regression