Corporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from Vietnam

Corporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from VietnamCorporate tax, earnings management, Corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - Evidence from Vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

Thuy, Doan Thi Thu CORPORATE TAX, EARNINGS MANAGEMENT, CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE AND CORPORATE PERFORMANCE:

MODERATING ROLE OF CORPORATE GOVERNANCE

- EVIDENCE FROM VIETNAM

A DOCTORAL THESIS

Major: Accounting Code: 9340301

Ho Chi Minh City, August, 2024

Thuy, Doan Thi Thu CORPORATE TAX, EARNINGS MANAGEMENT, CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE AND CORPORATE PERFORMANCE:

MODERATING ROLE OF CORPORATE GOVERNANCE

- EVIDENCE FROM VIETNAM

A DOCTORAL THESIS

Major: Accounting Code: 9340301 Supervisor: Dr Hong, Nguyen Thi Phuong

Ho Chi Minh City, August, 2024

STATEMENT OF AUTHENTICATION

I hereby declare that the thesis content, including all materials, has never been applied before for a degree in each single university other than where otherwise regulated and other sources acknowledged by clear references Furthermore, I declare that this thesis is available for interline library and copy so that titles and abstracts are made available to all researchers

Doan Thi Thu Thuy

August 6th, 2024

Signed………Thuy …………

ACKNOWLEDGMENT

This thesis was made possible thanks to the strong and great support of many people for whom I would be grateful to express my special thanks and appreciation One of the most important of whom is my supervisor, Nguyen Thi Phuong Hong, who supported me to complete my doctoral thesis as well as encouraged and guided

me throughout the research process I cannot tell her how much I appreciate it and it

is hard to express my deep gratitude to her enough

Special thanks to the professors, lecturers, and University of Economics Ho Chi Minh City for giving me a good opportunity to pursue postgraduate studies and doctoral programs in Accounting

I would also like to express my deep gratitude to my good friends and classmates for their effective comments and feedback during my work

I am grateful to my parents, my siblings, and my dearest friends for instilling in me

a desire to accomplish my goals and a commitment to accomplish what I started no matter how long it takes and how much they need me to be by their side Their encouragement and trust for me have given me motivation for this job Without their love and support, I would never have completed my journey

Finally, I would like to express my special thanks and deepest affection to my husband and my sons and my daughter for their unremitting patience and tolerance during this time of work I thank you for your love and have been there to encourage and support me all the way

TABLE OF CONTENTS

INTRODUCTION 1

1 Motivation for the Research 1

2 Research Objectives and Research Questions: 4

3 Subject and Scope of the Study 5

4 Research Methodology 6

5 Contribution of the Study 6

6 Structure of the Thesis 9

CHAPTER 1 CONCEPTUAL AND THEORETICAL FRAMEWORKS 11

1.1 Overview 11

1.2 Conceptual Framework 11

1.3 Theoretical Framework 25

1.4 Chapter Summary 31

CHAPTER 2 LITERATURE REVIEW AND RESEARCH HYPOTHESES 32 2.1 Overview 32

2.2 Corporate Tax Factors and Earnings Management 32

2.3 Corporate Social Responsibility Disclosure and Earnings Management 35

2.4 Corporate Governance Factors and Earnings Management 40

2.5 Earnings Management and Corporate Performance 45

2.6 Corporate Social Responsibility and Corporate Performance 49

2.7 Earnings Management, Corporate Social Responsibility and Corporate Performance: Moderating Role of Corporate Governance 57

2.8 Research Gaps 61

2.9 Chapter Summary 63

CHAPTER 3 RESEARCH METHODOLOGY 64

3.1 Overview 64

3.2 Research Framework 64

3.3 Research Design 66

3.4 Regression Model and Measurement of Variables 68

3.5 Data Analysis Technique 75

3.6 Chapter Summary 79

CHAPTER 4 FINDINGS AND DISCUSSION 80

4.1 Overview 80

4.2 Descriptive Analysis 80

4.3 Coporate Tax, Coporate Governance, Corporate Social Responsibility Disclosure and Earnings Management 86

4.4 Earnings management, Corporate Social Responsibility Disclosure and Corporate Performance 95

4.5 Earnings Management, Corporate Social Responsibility Disclosure, and Corporate Performance: Moderating Role of Corporate Governance 105

4.6 Chapter Summary 120

CHAPTER 5 CONCLUSION AND IMPLICATIONS 123

5.1 Overview 123

5.2 Main Findings 123

5.3 Implications and recommendations 127

5.4 Limitations and future research direction 134

5.5 Chapter Summary 135

CONCLUSION 136

REFERENCES 139

ABBREVIATIONS

AR Annual Reports

AAC Accrual Accounting

BA Average Age of Board Members

CEO Chief Executive Officer

CFO Operating Cash Flow

CG Corporate Governance

CP Corporate Performance

CS Corporate Size

CSR Corporate Social Responsibility

CSRD Corporate Social Responsibility Disclosure

CT Corporate Tax

CTE Current Tax Expense

DTE Deferred Tax Expense

DTL Deferred Tax Liability

HNX Hanoi Stock Exchange

HOSE Ho Chi Minh Stock Exchange

MCS Control Management Systems

NAAC Discretionary Accrual Accounting

NI Net Operating Profit

OLS Ordinary Least Square

REM Random Effects Model

ROA Return on Assets

ROE Return on Equity

SASB Sustainability Accounting Standards Board SEM Structural Equation Modeling

LIST OF TABLES

Table 1.1 Earnings management models 18

Table 1 2 Approaches to measure CSRD 22

Table 3 1 Explanation of the roles of variables in research framework 65

Table 3 2 Sample selection 67

Table 3 3 Operationalization of Variables 69

Table 3 4 List of CSRD standard 73

Table 4 1 Descriptive Statistics 81

Table 4 2 Summary of Pooled OLS, FEM and REM - 1st model tests 88

Table 4 3 Comparison results between Pooled OLS, FEM, REM and FGLS model 1 89

Table 4 4 Summary of Pooled OLS, FEM and REM - Model 2a Tests 96

Table 4 5 Comparison results between Pooled OLS, FEM, REM and FGLS - model 2a 98

Table 4 6 Summary of Pooled OLS, FEM and REM - Model 2b tests 100

Table 4 7 Comparison results between Pooled OLS, FEM, REM and FGLS model 2b 102

Table 4 8 Regression results FGLS for model 2a & model 2b 103

Table 4 9 Summary of Pooled OLS, FEM and REM Model 3a Tests 107

Table 4 10 Comparison results between Pooled OLS, FEM, REM and FGLS model 3a 108

Table 4 11 Summary of Pooled OLS, FEM and REM 3a model tests 112

Table 4 12 Comparison results between Pooled OLS, FEM, REM and FGLS model 3b 113 Table 4 13 Regression Results FGLS for Corporate Performance (ROA & TBQ)

116

LIST OF FIGURES

Figure 1.1 The Pyramid of Corporate Social Responsibility 20

Figure 3 1 Research Framework 64

Figure 4 1 CP (ROA) of listed corporates 2019-2021 83

Figure 4 2 CP (TBQ) of listed corporates 2019-2021 84

Figure 4 3 EM of Listed Corporates 2019-2021 85

Figure 4 4 CSRD of Listed Corporates 2019-2021 86

APPENDIX

APPENDIX 1 LIST OF SAMPLE SELECTED CORPORATES 169

APPENDIX 2 Regression results of the Pooled OLS model 1 184

APPENDIX 3 Comparison results between Pooled OLS and FEM model 1 185

APPENDIX 4 Comparison Results between Pooled OLS and REM model 1 186

APPENDIX 5 Results between FEM and REM model 1 188

APPENDIX 6 Regression Results FGLS Estimate of Model 1a 190

APPENDIX 7 Regression results of the Pooled OLS model 2a 191

APPENDIX 8 Comparison results between Pooled OLS and FEM model 2a 192

APPENDIX 9 Comparison results between Pooled OLS and REM model 2a 193

APPENDIX 10 Results between FEM and REM model 2a 194

APPENDIX 11 Regression results FGLS estimate of model 2a 195

APPENDIX 12 Regression results of the Pooled OLS model 2b 196

APPENDIX 13 Comparison results between Pooled OLS and FEM model 2b 197

APPENDIX 14 Comparison results between Pooled OLS and REM model 2b 198

APPENDIX 15 Results between FEM and REM model 2b 199

APPENDIX 16 Regression results FGLS estimate of model 2b 200

APPENDIX 17 Regression results of the Pooled OLS model 3a 201

APPENDIX 18 Comparison Results between Pooled OLS and FEM model 3a 202

APPENDIX 19 Comparison results between Pooled OLS and REM model 3a 203

APPENDIX 20 Results between FEM and REM model 3a 205

APPENDIX 21 Regression Results FGLS Estimate of Model 3a 206

APPENDIX 22 Regression Results of the Pooled OLS Model 3b 207

APPENDIX 23 Comparison Results between Pooled OLS and FEM model 3b 208

APPENDIX 24 Comparison Results between Pooled OLS and REM model 3b 209

APPENDIX 25 Results between FEM and REM model 3b 211

APPENDIX 26 Regression Results FGLS Estimate of Model 3b 212

APPENDIX 27 Results of multicollinearity assumption test - Model 1 213

APPENDIX 28 Results of standard distribution residual assumption test- Model 1 214

APPENDIX 29 Results of constant variance assumption test - Model 1 214

APPENDIX 30 Results of autocorrelation assumption test - Model 1 215

APPENDIX 31 Results of multicollinearity assumption test - Model 2a 215

APPENDIX 32 Results of standard distribution residual assumption test - Model 2a 216

APPENDIX 33 Results of constant variance assumption test - Model 2a 216

APPENDIX 34 Results of autocorrelation assumption test - Model 2a 217

APPENDIX 35 Results of multicollinearity assumption test - Model 2b 217

APPENDIX 36 Results of standard distribution residual assumption test - Model 2b 218

APPENDIX 37 Results of constant variance assumption test - Model 2b 218

APPENDIX 38 Results of autocorrelation assumption test - Model 2b 219

APPENDIX 39 Results of multicollinearity assumption test - Model 3a 219

APPENDIX 40 Results of standard distribution residual assumption test- Model 3a 220

APPENDIX 41 Results of constant variance assumption test - Model 3a 220

APPENDIX 42 Results of autocorrelation assumption test - Model 3a 221

APPENDIX 43 Results of multicollinearity assumption test - Model 3b 221

APPENDIX 44 Results of standard distribution residual assumption test - Model 3b 222

APPENDIX 45 Results of constant variance assumption test - Model 3b 222

APPENDIX 46 Results of autocorrelation assumption test - Model 3b 223

ABSTRACT

The aim of this study is to analyze 3 groups of relationships, including: The first relationship group is the effects of corporate tax factors (CT) (including (tax planning (TP), corporate tax expense (CTE), deferred tax expense (DTE), deferred tax asset (DTA), deferred tax liability (DTL)), corporate governance factors (CG) (board characteristics: board independence (BI), board size (BS), board age (BA), board meeting (BM), and board women (BW)), and corporate social responsibility disclosure (CSRD) on earnings management (EM) The second relationship group is the effects of EM and CSRD on corporate performance (CP) The third and last relationship group is the effects of EM and CSRD on corporate performance (CP) with the moderating role of corporate governance factors (CG) in the corporates listed on the Vietnamese stock market (HOSE and HNX) The author uses balance sheet data collected from financial statements and annual reports of 267 corporates listed on the Vietnamese stock market (HOSE and HNX) in the period 3 years 2019 -

2021, a total of 801 observations The author has performed tests to select the most suitable model among 3 models of Pooled OLS, FEM and REM Because the model has heteroskedasticity and auto-correlation, the author used FGLS to overcome these phenomena The research results show that TP and CTE have a positive effect on EM

In contrast, DTA has a negative effect on EM However, DTE and DTL do not impact

EM Board independence (BI) has a positive effect on EM, whereas board size (BS) and women on the board (BW) have negative effects on EM Correspondingly, BW has a negative effect on EM However, average age of board members (BA) and board meeting (BM) do not affect EM CSRD does not affect EM Besides, EM and CSRD have a positive effect on corporate performance (CP) (measured in both ways ROA & Tobin's Q (TBQ)) In addition, board independence (BI), board meeting (BM) and women on the board (BW) have a role of weakening the influence of EM on CP (measured by ROA) However, the rest of corporate governance (CG) factors such as

BS and BA have no role in moderating the influence of EM on CP (measured by ROA) BS, BA and BW have a role in moderating the relationship between

CSRD-CP (measured ROA) Specifically, BS and BA enhance the influence of CSRD on CP (measured by ROA) In contrast, BW weakens the influence of CSRD

on CP (measured by ROA) The rest of CG factors such as BI and BM have no role in moderating the influence of CSRD on CP (measured by ROA) In addition, BI and

BS moderate the relationship between EM-CP (measured by TBQ) Specifically, BS enhances the influence of EM on CP (measured by TBQ), while BI weakens this influence The rest of corporate governance (CG) factors such as BA, BM and BW have no role in moderating the influence of EM on CP (measured by TBQ) Specifically, all 5 factors of corporate governance (CG) do not moderate the influence of CSRD on CP (measured by TBQ)

Based on these research results, the author has suggested some theoretical and practical implications, proposed recommendations for a number of relevant subjects such as researchers, managers of corporates listed on the stock market (HOSE and HNX), state management agencies, investors, and other related entities

Keywords: Corporate performance, earnings management, corporate social

responsibility, corporate governance, corporate tax

INTRODUCTION

1 Motivation for the Research

Corporates are currently experiencing a competition to exist in the globalization market While implementing earnings management (EM), the corporate’s management board confronts a matter that if earnings increase, they will reflect great corporate performance (CP), whereas they will also affect the increase in corporate tax (CT) In fact, the government and taxpayers are eager to increase tax revenue, while corporates are making efforts to decrease the tax burden by planning taxes Tax planning (TP) is a tax compliant behavior because it

is approved by the law (Murphy 2003) In other words, TP is the process of minimizing tax liabilities, but still in current tax regulations Corporates in Viet Nam preparing financial statements have to comply with Vietnamese accounting regimes and VAS (Circular No 200/2014/TT-BTC) Moreover, corporates in Vietnam must prepare corporate income tax finalization reports in line with current tax laws (The Law on Corporate Income Tax 2008 has been amended and supplemented) The difference between tax regulations and VAS will create differences between taxable income and accounting profits

Additionally, corporates freely choose the accounting method in making decisions of choosing provisions for deferred tax income or expense Expense recognition or deferred tax collection is based on differences in recording tax regulations and accounting standards This facilitates the management board to implement EM Phillips et al (2003) concluded that the board of directors (BD) tries to manage an increase in accounting income, but not an increase in taxable income Managing an increase in accounting profit causes a temporary discrepancy between accounting and taxation Phillip also found that the deferred tax burden increases the temporary difference between financial gains and accounting profits Deferred tax burden can be used to predict EM implemented by corporates to meet the two goals of avoiding a decline in profits and losses as well

Deferred income tax assets are the amount of income tax recovered in the future period as a result of temporary discrepancy deducted from expenses when calculating financial gains and offsetting the remaining shortfall The recognition

of deferred tax assets occurs when the accounting profit is less than the taxable profit, which means the tax burden will be less than the amount of tax payable This makes corporate possibly defer taxes payable in the upcoming period This enables corporates to implement EM to avoid high tax burdens To illustrate, in July 2023, the State Securities Commission sanctioned 3 corporates for information disclosure violations First, An Giang Import and Export Joint Stock Corporate received the heaviest fines, with a fine of more than VND 267 million for various violations, the most serious of which was the error of announcing false profits Two other corporates were also sanctioned respectively: Five Metals Fortress Vietnam Industry and Tien Bo Group

Beside corporate tax (CT), corporate governance (CG) is one of the prominent factors in studies of factors affecting EM, including board characteristics and ownership structure Various research on the board characteristics can be considered such as: the number of members (Nguyen, 2017), the percentage of independent members (Pham Thi Bich Van, 2017), the proportion of female members (Tran & Dinh, 2017) Additionally, ownership structure factor is also manager ownership (Ngo, 2019), organizational ownership (Pham et al., 2019a), foreign ownership (Ngo, 2019) and state ownership (Pham et al., 2019b)

Previous research also mentioned on the relationship between CSRD and EM CSRD recently has achieved popularity worldwide In Vietnam, the implementation of corporate social activities has progressed, from a charity-oriented approach to a more strategic step Billions of VND have been spent by corporates yearly to contribute to society However, the implementation of CSRD has not yet been recognized by the corporate community and investors in Vietnam There has been limited research on the role of CSRD in general as well as the level of EM of corporates in Vietnam in particular Even in developed countries,

the impact of CSRD on this method of measuring financial statements is inconsistent (Gaio et al., 2022)

Chih et al (2008), Hong and Andersen (2011), Kim et al (2012), and Dimitropoulos and Chatzigianni (2022) demonstrated a negative relationship between CSRD and EM They concluded that socially responsible corporates have fewer EM Other research noted a positive relationship that high levels of CSRD stem from managers' motivation to hide their personal interests or the corporate's true performance (Choi & Byun, 2018; Habbash & Haddad, 2020)

Indeed, CP is one of the most important criteria and a widely interested indicator toward those who are shareholders, business managers, and capital providers such as existing investors, potential investors and banks Therefore, researchers have also been very interested in important factors affecting CP, two of which are EM and CSRD There have been research looking at the relationship between EM and CP such as Bazrafshan et al., (2016), Nasiri et al., (2020), Dakhlallh et al., (2020), Ayisi et al., (2021), Gajdosikova et al., (2022), Kahloul et al., (2022) In Vietnam, there have also been a number of studies such as Khuong et al., (2019), Nguyen et al., (2021) In addition, there have also been several studies examining the relationship between CSR and CP such as Lin et al., (2009), Karagiorgos (2010), Crisóstomo et al (2011), Boonnual (2016), Velte (2017), Kao

et al., (2018), Hakimi et al., (2023), Lukiman & Wirianata (2024), Dao et al., (2020), Nguyen & Nguyen (2021,) and Tran et al., (2022) However, the results of these studies have not been consistent

Additionally, there have been some researchers who have considered the role

of some CG factors in the relationship between EM and CP, the relationship between CSRD and CP The number of these studies is not large They are the studies of Tangjitprom (2013), Asshiddiq (2016), Ibrahim (2019), Latifah et al., (2021), Rossi et al., (2021), Gharbi & Jarboui (2024) However, the results of these studies are also inconsistent

In fact, in Vietnam, as far as the author has concerned up to now, there has not been any research considering the moderating role of factors in corporate governance (CG), specifically factors in corporate governance characteristics (such

as BI, BS, BA, BM and BW) moderate the relationship between EM and CP as well

as the relationship between CSRD and CP

Therefore, the author finds it really necessary to carry out a study examining the relationships among CT, CSRD, CG and EM, the relationships among EM, CSRD and CP without the moderating role of CG, and the relationships among EM, CSRD and CP with the moderating role of CG of listed corporates on the Vietnamese stock market (HOSE and HNX) in order to obtain comprehensively empirical results with many aspects, and in depth because these relationships are of interest to many related subjects

This research result is a useful scientific basis for the author to suggest some theoretical implications to researchers, PhD students, graduate students, undergraduates, and other subjects, as well as some practical implications useful to those who are managers, regulatory bodies, independent audit firms, existing and potential investors, independent audit firms, and other related subjects Obviously, they want to consult it and make rational decisions

2 Research Objectives and Research Questions:

The aim of this study is to examining and analyzing 3 groups of relationships simultaneously: The first relationship group is the effects of CT factors (TP, CTE, DTE, DTA, DTL), CG factors (board characteristics including BI, BS, BA, BM, BW), and CSRD on EM The second relationship group is the effects of EM and CSRD on

CP The third and last relationship group is the effects of EM and CSRD to CP with the moderating role of CG factors (board characteristics including BI, BS, BA, BM, BW) In order to achieve the above research objectives, the main contents of the thesis need to answer the following questions:

Question 1: Do CT factors (including TP, CTE, DTE, DTA, DTL), CG factors

(board characteristics including BI, BS, BA, BM, BW), and CSRD affect EM of corporates listed on the Vietnamese stock market (HOSE and HNX)?

Question 2: Do factors including EM and CSRD affect the CP of corporates

listed on the Vietnamese stock market (HOSE and HNX)?

Question 3: Do CG factors (board characteristics including BI, BS, BA, BM, BW)

moderate the relationships between EM and CSRD on CP (measured by both ROA and TBQ) of corporates listed on the Vietnamese stock market (HOSE and HNX)?

3 Subject and Scope of the Study

- Research subject: Relationships related to CT factors (TP, CTE, DTE, DTA, DTL),

CG factors (board characteristics including BI, BS, BA, BM, BW), CSRD, EM, and

CP

- Research scope:

+ Scope of space: The non-financial corporates listed on the Vietnamese stock

market (HOSE and HNX, no research on financial corporates such as banks, securities corporates) The author chooses the scope of the study to be corporates listed on the Vietnamese stock market (HOSE and HNX) because their information is used by many people to make important decisions involved In addition, the data collected for the analysis are only available to corporates listed on the Vietnamese stock market (HOSE and HNX) In addition, the scope of this study does not include financial corporations such as banks, securities corporates because the accounting regime and some other relevant regulations applicable to financial corporates are inconsistent with non-financial corporates

+ Scope of time: Research data collected on financial statements and annual

reports of corporates listed on the Vietnamese stock market (HOSE and HNX) in the period of 3 years 2019 - 2021 The author selected the research sample only in a 3-year period of 2019-2021 In fact, the data collection of variables such as CSRD, BI,

BS, BA, BM, BW were done manually, so it took a lot of time In addition, the 3-year and ending research sample was 2021 because the PhD candidate attended the course

of 2020, carried out this study, and started collecting research data in 2022 Hence, the latest data could only be collected on the financial statements and annual reports

of 2021

4 Research Methodology

This study applied a quantitative research approach In this approach, from the research problem, the author performed an overview of domestic and international studies, and at the same time, analyzed the theories of relevant fundamental theories such as Agency theory, Stewardship theory, Stakeholder theory, Resources Dependence Theory to explain relationships between variables in the model On this basis, the author proposed research framework and hypotheses To test the hypotheses, the author measured variables in the study model and collects data The research data were derived from the financial statements and annual reports of a sample covering around 267 non-financial corporates listed on the Vietnamese stock market (HOSE and HNX) in the period from 2019 to 2021, and approximately 801 observations The study used balance panel data, and the author compared the among the three models Pooled OLS, FEM and REM to select the most suitable model In case the model violated the assumption of heteroscedasticity or autocorrelation or both, the author used the FGLS model to fix them The author then discussed the research findings and proposed some relevant implications

5 Contribution of the Study

- Theoretically:

Although previous studies considered individual relationships such as the effects of CT factors (TP, CTE, DTE, DTA, DTL) on EM, CG factors (board characteristics including BI, BS, BA, BM, BW) on EM, and CSRD on EM Additionally, previous studies had examined the individual relationships between

EM and CP, and the relationship between CSRD and CP In fact, there have also been

a number of studies examining the moderating role of a number of factors belonging

to board characteristics such as BI, BS, BW, etc on the individual relationship between EM and CP, the relationship between CSRD and CP However, there have

been no studies examining the moderating role of the 5 characteristics of BI (BI, BS,

BA, BM, BW) on the influence relationship of EM and CSRD on CP Therefore, this has been the first study to conduct by the author in Vietnam to examine and analyze 3 relationships simultaneously, specifically: The first relationship group is the effects

of CT factors (TP, CTE, DTE, DTA, DTL), CG factors ( board characteristics including BI, BS, BA, BM, BW), and CSRD on EM The second one is the effects of

EM and CSRD on CP The third and last relationship group is the effects of EM and CSRD to CP with the moderating role of CG factors (board characteristics including

BI, BS, BA, BM, BW) Therefore, the completed thesis will provide the model theory

of the above relationships Thus, this study provides an important and useful scientific foundation for researchers, PhD students, graduate students, undergraduates, and other subjects to continue further research as well as refer to other related topics in the future on these groups of relationships in the context that these fields have not been fully and comprehensively explored in Vietnam

- Practically:

The completed thesis has made a number of practical contributions as follows:

Firstly, the research results show that TP and CTE have a positive effect on

EM In contrast, DTA has a negative effect on EM However, DTE and DTL do not impact EM Besides, BI has a positive effect on EM, whereas BS and BW have negative effects on EM Simultaneously, BW has a negative effect on EM However, BA and BM do not affect EM, and neither do CSRD In fact, the experimental research results can be a scientific basis and a useful reference for corporates listed on the Vietnamese stock market related to the characteristics of the board of directors (BD) such as BS, BW, etc., for tax authorities in tax inspection and examination of corporates listed on the Vietnamese stock market for independent audit firms to have risk assessment in performing audits of client firms' financial statements (such as identifying EM capabilities of clients), and for

existing investors, potential investors, and other stakeholders who get involved in the use of information to make appropriate decisions

Secondly, the research results indicate that both EM and CSRD have a positive

effect on CP (measured by ROA & TBQ), helping listed corporate managers be aware of the importance of enhancing CSRD in order to improve CP, hence attract domestic and foreign investors In addition, corporates listed on the Vietnamese stock market should participate and disclose information about their corporate's sustainable development activities to be able to integrate with the general development trend nationally and globally Besides, regulatory bodies should develop and issue regulations on sets of criteria related to CSRD to enhance the transparency in reporting, enhance investors' awareness and skills by holding business conferences, strengthen investor protection, create a stable and long-term investment environment, and enhance sustainable environments for investors In addition, the existing and potential investors, and other related subjects need to be more cautious when using financial statement information and annual reports to make rational decisions, especially information related to CP (measured by ROA and TBQ) and CSRD

Thirdly, the research results found that BI, BM and BW weaken the influence

of EM on CP (measured by ROA) The rest of CG factors such as BS and BA have

no role in moderating the influence of EM on CP (measured by ROA) Simultaneously, BS, BA and BW have a role in moderating the relationship between EM-CP (measured by ROA) Specifically, BS and BA enhance the influence of CSRD on CP (measured by ROA), while BW weakens this one The rest of CG factors such as BI and BM have no role in moderating the influence of CSRD on CP (measured by ROA) Besides, the results show that BI and BS have a role in moderating the relationship between EM-CP (measured by TBQ) Specifically, BS enhances the influence of EM on CP (measured by TBQ), whereas

BI weakens this influence The rest of CG factors such as BA, BM and BW have no

role in moderating the influence of EM on CP (measured by TBQ) Specifically, all

of 5 factors of CG have no role in moderating the influence of CSRD on CP (measured by TBQ), either The empirical study results can be a useful scientific basis and reference for the corporates listed on the Vietnamese stock market These corporates should establish BD with higher independence Simultaneously, they should build gender-diverse management apparatus regulatory In addition, the listed corporates should establish a management apparatus with gender diversity, and refer to this research results when selecting board members They also need to maintain and strengthen the role of board size (BS) In addition, the regulatory bodies can promulgate regulations on gender diversity to establish members of BD Specially, they should train and foster more knowledge, management capacity, and

so on to female members on BD In addition, according to the research results, the existing and potential investors, and other related subjects are better aware of the moderating role of each BD characteristic on the relationship between EM affecting CP and CSRD affecting CP, helping to make decisions in voting on BD-related issues and other ones

6 Structure of the Thesis

In addition to the introduction and conclusion, the thesis has 5 chapters, specifically as follows:

Introduction

This content presents the research problem, research objectives, research questions, subjects and scope of the study, research methods, contribution of the study, and the structure of the study

Chapter 1 Conceptual and Theoretical Frameworks

This chapter presents some concepts and some important related terms In addition, this chapter also analyzes the underlying theories to show that there are relationships among the variables in the model on which to build the research model and the research hypotheses presented in chapters 3 and 4

Chapter 2 Literature Review and Research Hypotheses

This chapter will overview studies in the world and in Vietnam related to the relationships: the first effects of CT factors (TP, CTE, DTE, DTA, DTL), CG factors (board characteristics including BI, BS, BA, BM, BW), and CSRD to EM; the second effects of EM and CSRD on CP; and the third and last effects of EM and CSRD on

CP with the moderating role of CG factors (board characteristics including BI, BS,

BA, BM, BW) On that basis, the author gives the results achieved by previous studies and the problem to be further researched, from which the author identifies research gaps

Chapter 3 Research Methodology

This chapter covers the Research Framework, Research Design, Regression Model and Measurement of Variables in the model and Data Analysis Technique

Chapter 4: Findings and Discussion

This chapter focuses on analyzing and discussing the results of research, including Descriptive analysis, Correlation Analysis, and Regression Analysis

Chapter 5: Conclusion and Implications

In this chapter, the author suggests some useful theoretical implications relevant

to a number of subjects such as researchers, PhD students, graduate students, undergraduates, and other subjects, as well as some practical implications useful to those who are managers, regulatory bodies, independent audit firms, existing and potential investors, independent audit firms, and other related subjects

Conclusion

This content presents the conclusion of the thesis

CHAPTER 1 CONCEPTUAL AND THEORETICAL FRAMEWORKS 1.1 Overview

Chapter 1 presents the conceptual and theoretical frameworks as a basis for proposing a research framework and developing research hypotheses Therefore, the contents of chapter 1 include: Conceptual Framework and Theoretical Framework

1.2 Conceptual Framework

1.2.1 Corporate Performance

Corporate performance (CP) refers to how well a corporate achieves its strategic and operational objectives (Witcher & Chau, 2010) While a CP can be most commonly understood as profitability, its goals are often more complex The strategic goals of the corporate are set by the corporate's senior management and address the goals of financial and non-financial performance Goals can be determined by savings (efficiency) or profitability (increased sales), or by other appropriate measures Corporates then use at least some metrics to track performance such as financial figures, balanced scorecards or others, and to adjust performance as required CP is known to be influenced by a wide range of strategic choices including market orientation, innovation and product development, production efficiency, marketing and customer communication, resource and resource management, and many others

Yuen et al (2018) concluded that CP measures corporate’s ability to use human material resources to achieve goals set by corporates CP is measured using two methods: accounting-based and market-based measures The two measures present diverse perspectives on how to evaluate a corporate's financial performance with different theoretical implications, but each has its own specific biases (McGuire et

al, 1986) Therefore, it will be difficult to compare the results of different studies in the use of different measures

Accounting-based measures are derived from financial statements, and are not influenced by market speculation or investor perception, then can therefore be considered more reliable than the returns and market prices of stocks (Lopez et al., 2007) which are return on assets (ROA) and return on equity (ROE)

While accounting measures incorporate information from period statements, performance measures are based on investors' perspectives (Yang et al., 2019) The market-based measurement commonly used in studies is TBQ (Post and Byron, 2015; Yang et al., 2019)

In this study, the author uses both of these measurement methods, specifically with accounting-based measurement using ROA as a representative, and market-based measurement using TBQ indicator as a representative

1.2.2 Earnings Management

Definition of Earnings Management (EM)

EM refers to the management activity of manipulating reported profits by influencing the financial reporting process of a corporate EM is one of the most interested topics of accounting researchers today because the profit figure on the financial statements is an important indicator, and used to evaluate operational performance, determining corporate’s stock price

According to Schipper (1989), EM is a purposeful intervention in the financial reporting process to the outside with the aim of obtaining private benefits Fischer and Rosensweig (1995) defined EM as follows: "Actions by division managers serve to increase (decrease) current reported earnings of a division without a corresponding increase (decrease) of the long-term economic profitability of the division" Hence, this definition identifies two important components of EM, including: consequence and purpose

Healey and Wahlen (1999) gave out a more comprehensive definition of EM:

"EM occurs when managers use judgment in financial reporting and in structuring

transactions to alter financial reports to either mislead some stakeholders about the underlying CP or to influence contractual outcomes depending on reported accounting numbers"

Davidson et al (2005) argues that the origins of EM within the framework of accounting standards include the choice of accounting policy, the application of accounting policies and the timing of investment and liquidation and sale of assets

EM reflects the actions of managers in choosing accounting methods that benefit them or increase the corporate’s market value (Scott, 1997)

Healey & Wahlen (1999), Roychowdhury (2006) and Gajevszky (2014) argues that the manipulation of accounting data as a result of ordinary business seems to arise from management's motive to mislead shareholders to ensure that the financial position of the organization achieves its goals in the course of doing business Because of the information asymmetry existing between insiders and outsiders, individuals within the organization may rely on their control over financial reporting and access to financial information within the corporate to exaggerate earnings or hide the achievement of adverse outcomes From this perspective, management board can use various methods such as masking changes in economic performance by creating reserves for future periods, thus reducing fluctuations in income (Leuz et al., 2003; Hijazi & Al-Thuneibat, 2015)

Ronen et al (2008) summarized the above views and proposed 3 groups of EM based on information disclosure objectives: White EM group was to increase the quality of financial statements, gray EM group was to increase the value of the business or the interests of managers, and the black EM group aimed at falsifying or reducing the transparency of financial statements Since then, Ronen et al (2008) argued that EM behavior was a set of management decisions aiming at maximizing the value of a corporate by not properly reflecting real profits in the short term

Wang Jian Hui (2009), EM is widely used in domestic and foreign enterprises

If this is the case, in the long run, it will reduce the quality and reliability of financial statement information Accounting information about profits is important information that investors, creditors, etc use to evaluate the pros and cons of corporates

Overall, “EM is an activity carried out by managers to choose accounting policies in order to achieve certain accounting policies and objectives, including the use of accrual accounting in the preparation of financial statements EM is a practice where managers are given flexibility in determining financial policies to protect their corporates in anticipating unexpected events” (Sirait et al, 2022) With the aim, for the benefits of the parties involved in the contract, making income smoothing shows the corporate's profit growth over time (Scott, 1997) It can be said that excessive EM will cause accounting information to be misleading, which causes misleading information users On the other hand, EM only aims to achieve

an immediate optimal profit level in the short term without being associated with the completion of corporate product reform and organization, which may bring risks

to the future corporate development

Types of Earnings Management

EM is divided into two types: Real Earnings Management and Accruals Earnings Management

Real Earnings Management

Managers will influence arising economic operations, especially sales, costs, and production Accordingly, managers can reduce costs such as research and development costs, training costs to keep profits at a predetermined level In addition, managers can also influence sales policies, reduce selling prices below listed prices to achieve predetermined profit targets

Accruals Earnings Management

Managers implement through adjustable accrual accounting variables by the selection and application of accounting methods within the framework of accounting standards and regimes

Earnings Management Techniques

There are many techniques in EM, but the most common and popular are twelve (12) as highlighted by most researchers as follows: (Omar et al., 2014)

Big Bath technique: A technique used when a corporate had some losses or charges due to operation restructuring, troubled debt restructuring, asset impairment and written-down, discontinued operation of a segment or subsidiary, and they wanted to get rid of it all at once in current or particular period This technique is based on the belief that if the management wants to report bad news of losses, it is better to report it all at once and get it out of its way

Big Bet for the future technique: A technique is commonly used after acquiring another corporate It involves management’s judgment in writing-off of the research and development cost as well as integrating the earnings of the acquired corporate into the consolidated results of the parent

Changing the GAAP technique: This involves management judgment in volunteering for a new accounting standard, changing revenue, or expenses recognition rules (e.g changing depreciation method from reducing balance to straight line method)

Cookie Jar Reserve technique: This involves manager’s judgment in creating financial slack by over estimating future expenses with the hope that actual future expenses will be lower than the provisions, thereby creating a reserve that they can tap and boost their future performance It is commonly used in estimating sales revenue, warranty cost, bad debt write-offs, pension expenses, etc

Depreciation, Amortization and Depletion (DAD) technique: This involves management’s discretionary judgment in selecting the write-off methods and periods,

changing the estimation methods of salvage values or change of asset class or usage (e.g from operating to non-operating or vice versa)

Early Retirement of Debt technique: This technique involves manager’s judgment in selection the accounting period to retire debts for the purpose of utilizing any gain or loss on early retirement It includes retirement of long-term bond issued

by corporate, debt for debt swaps and or debt for equity swaps

Flushing the Asset Portfolio technique: Most GAAPs requires investments to be classified either as held for trading or available for sale and any change in value is recorded in the income statement This technique involves manager’s judgment in deciding the holding intent, timing of sales and written down of impaired investments

Operating Vs Non-Operating Income technique: Managers know that investors and financial analysts use core (operating) earnings of the corporate to project future growth not the non-operating income, so this technique involves the usage of management’s judgment in identifying and reporting items that are operating or non-operating (e.g items like un-usual or special charges, extraordinary gains or losses, etc.)

Sales or Leaseback and Asset Exchange technique: This technique involves management decision on outright sales of assets to get more revenue in certain periods, sale and leaseback of same asset to get some revenue and exchange of similar productive assets without recognition of any gain or loss

Shrink the Ship technique: This technique involves corporate repurchasing its own shares without reporting and gain or loss in their financial statement, because the key objective of this technique in most cases is to increase the corporate’s earnings per share

Throw Out a Problem Child technique: This technique involves manager’s judgment to dispose a subsidiary when the group’s earnings are dragged down by non

or less performing subsidiary for purpose of saving or improving the group’s financial results and actions taken may include; outright disposal of the subsidiary,

spinning off the subsidiary, creating a special-purpose entity (SPE) for financial asset and equity exchange

Use of Derivatives technique: As derivatives are financial instruments deriving their values from other assets, managers use them as techniques to manage their earnings by hedging against future business risks like fluctuations in exchange rates, price changes, and commodity scarcity

Earnings Management Models

According to Siekelova (2021), to understand the methodology of EM models, it

is necessary to define the following terms:

- Accruals are short-term liabilities (e.g interest, wages, taxes) arising during the accounting period, but are not supported by any invoice When the financial statements for a particular accounting period are prepared, accruals are estimated using experience (e.g based on previous payments) Accrual represents increasing and such growing assets of the corporates are not taken into account in order to comply with the accrual rule

- Discretionary accruals are optional costs that have yet to be realized, but are already recorded in the accounting books (e.g the aforementioned bonuses or bonuses for managers)

- Non-discretionary accruals are mandatory costs that must be incurred and are already recorded in the accounting books (e.g wages for the next month, energy bill)

There are four basic methods of EM measurement (Siekelova, 2021) including: Graphical Methods Based on Time Series Data, Mathematical Modeling of Specific Accruals, Mathematical Modeling of Total Discretionary Accruals Using Time Series Data, Mathematical Modeling of Total Discretionary Accruals Using Cross-Sectional Abnormal Accruals

It can be seen that there are numerous alternative models for measuring EM

Some EM measurement models are presented below (Table 1.1)

Table 1.1 Earnings management models

CFO Modified Jones Model Kasznik (1999)

CFO and BM Modified Jones Model Larcker & Richardson (2004) The Performance adjusted discretionary accrual

model

Kothari et al (2005)

The Extended Modified Jones Model Yoon et al (2006)

Real Earnings Management Model Roychowdhury (2006)

(Source: Compiled by the author)

In this research, the author uses Modified Jones Model (Dechow et al., 1995) to measure the EM variable as it is one of the popular EM measurement models, and

has been used by many authors in their studies related to EM

1.2.3 Corporate Social Responsibility

Definition of Corporate Social Responsibility (CSR)

CSR has gained a lot of interested scholars, but a consensus is still missing concerning its definition and its standards to be established, and its measurement method

Recently, there have been two main views on CSR Some support the idea that corporates focus only on their corporates, not other issues For example, Friedman (1970) argues that “the only CSR is to increase its profits within the rules of the game” In fact, corporate bearers need to ensure that their field of operation is

effective, regardless of other factors With this view, other environmental and social responsibilities fall on the state In contrast, others believe that in addition to seeking corporate benefits, corporates must also be responsible for everything around them such as the environment, contributing to employees, shareholders, consumers and suppliers One common theme behind CSR writings is that managers should focus on multi-stakeholders’ welfare instead of concentrating only

on maximizing the wealth of the shareholders (Becchetti & Trovato, 2011) The reason is that the corporate cannot exist independently, cannot develop without supporting factors Furthermore, the aforementioned factors are directly related to the corporate Therefore, corporates must respect and have reasonable support policies with these factors Some definitions of CSR commonly used in research articles include:

The term CSR first came to stakeholders’ attention in Bowen (2013) “Social Responsibilities of the Corporate men”, which defined social responsibility as "the obligations of corporate men to pursue those policies, to make those decisions or to follow those lines of actions which are desirable in terms of the objectives and values of our society"

In 1979, Carroll published a 4 - part definition of CSR, and then in 1991, he proved it in the form of a pyramid It expressed the responsibilities that corporates need to care about as "good corporate citizens": economic responsibility, legal responsibility, moral responsibility, and charitable responsibility

Figure 1.1 The Pyramid of Corporate Social Responsibility

(Source: Caroll, 1991)

According to the European Commission, CSR is a concept whereby corporates voluntarily integrate social and environmental concerns into their corporate operations and interact with their stakeholders

However, since 2003, the concept of CSR introduced by the World Bank's Private Economic Development Group has been the most widely accepted and used Accordingly, “Corporate Social Responsibility is the commitment of corporates to contribute to sustainable economic development, through compliance with standards of environmental protection, gender equality, labor safety, labor rights, fair pay, staff training and development, community development, etc in a way that benefits are set for both corporates as well as the overall development of society."

In order to meet the needs of preparing and presenting sustainable development reports as well as CSR, many sets of standards and guidelines have been established and widely used in the world, such as:

The standard was issued in 2010 by the International Organization for Standardization – ISO 26000: This Code provides guidelines for CSR practice, which are applicable to organizations of all types, both public and private, in developed and developing countries, as well as economies in transition ISO 26000 identifies seven core issues of CSR, including: organizational governance, human rights, labor practices, environment, fair governance practices, consumer issues, community participation and development

Global Reporting Index (GRI) integrated GRI set of Sustainable Development Reporting Standards Earlier, GRI released versions of the GRI Guidelines By 2016, GRI had transformed from providing guidance to establishing global standards for sustainability reporting - GRI Standards, consisting of 36 standards divided into 04 groups: 01 overall standard group and 03 groups of standards according to economic, environmental and social topics After the 2016 edition, GRI Standards continued to update existing standards Sustainability Accounting Standards Board - SASB: In 2018, SASB published the complete SASB Standard comprising 77 industry-specific sets of standards, globally applicable In addition, SASB provides

an engagement guide for investors to review questions to discuss with corporates and an implementation guide for corporates to explain the issues and approaches to consider when implementing the SASB Standard

In addition, there are also many views on approaches to measure CSR Galant

and Cadez (2017) have summarized some methods (Table 1.1) as follow:

Table 1 2 Approaches to measure CSRD

Data Index Data are available

and the method helps with multidimensional comparisons

Unscientific, limited in number

of corporates (geography, size, industry)

Ballas et al (2019)

Content analysis Flexibility for

studies

The researcher is subjective The data are not publicly available

Habib and Hasan (2016) Martínez-Ferrero et

al (2018)

Questionnaire Flexibility for

studies

Subjectiveness of the researchers and the surveyed subjects, prone to errors in

measurement

Gallardo-Vázquez

and Sanchez-Hernandez (2014)

Measurement of

an aspect

Data availability and easy

comparison

not following the multidimensional theory of CSR

Fan et al (2021)

(Source: Galant and Cadez, 2017)

The announcement of CSR in Vietnam in recent years and now has been very interested The Ministry of Finance has issued circulars on Vietnamese CSR announcement in turn The first is Circular 52/2012/TT-BTC issued on April 5th,

2012 Subsequently, the Organizer also issued 155/2015/TT-BTC on October 6th,

2015, replacing Circular 52/2012/TT-BTC Additionally, most recently, Circular 96/2020/TT-BTC issued on November 16, 2020, took effects from January 1st, 2021, replacing Circular 155/2015/TT-BTC

In Vietnam, there is no specific database on CSRD and CSRD indicators of each corporate As a result, the author will use the GRI Standard (GRI- GSSB) combined with the criteria in Circular 96/2020/TT-BTC to measure CSRD

1.2.4 Corporate Governance

Corporate governance (CG) has become a fascinating issue to Asian researchers, especially after the 1997 financial crisis Definitions vary based on the framework and cultural situation of the country under consideration (Armstrong and Sweeney,

2002) CG refers to systems, mechanisms, processes and structures direct and control the corporate (Aboagye & Otieku, 2010; Puni & Anlesinya, 2020) O'Donovan (2003) considered CG to be "an internal systemencompassing policies, processes and people serving the needs of shareholders and other stakeholders by directing and controlling management activities with good business savvy, objectivity and integrity" In other words, it defined the legality, ethics, and ethical values of a corporate in order to protect the interests of its stakeholders

The Financial Commission on CG in Malaysia (2005) defined CG as "the process and structure used to direct and manage the corporate and affairs of the corporate towards enhancing business prosperity and corporate accountability with the ultimate objective” Accordingly, the term "corporate governance" was used in the 1980s to broadly describe "the general principles by which business activity and CG are directed and controlled" (Dor et al 2011)

Khan (2011) claimed, “CG is the broad term which describes the processes, customs, policies, laws and institutions directing the organizations and corporations

in the way they act, administering, and controlling their operations.” According to the research of Amonboev (2020), “The CG represents the system through which corporates and firms can be controlled and directed Based on the definition of CG,

it can be stated that the objective of the good CG is to maximize the contribution of the corporates to the whole economy, particularly to all stakeholders.”

Recently, Tibiletti et al (2021) has defined CG as a system of rules, policies, and practices dictating how a corporate's board of directors manages and oversees the operations of a corporate

Even though researchers define CG in different ways, it is mainly concerned with some aspects:

Economically, CG aims to achieve efficiency in transferring scarce capital to investment projects with the highest returns It has also become an important

determinant of institutional investment (Bushee et al., 2007) and components of institutional investors' reform initiatives (Karpoff, 2001) There are two types of businesses: internal (e.g., board size, board independence and board of directors) and external (e.g., competitive market conditions, the market for managerial labor and talent and market for corporate control)

Applying CG is to ensure that corporates are managed in the best interests of their owners and shareholders (Ahmed et al, 2008) This applies specifically to listed corporates Even so, it can also apply to other forms of corporates such as corporates with few principal owners and a large group of smaller shareholders, public corporates (in which all citizens are stakeholders), partnerships, and privately owned corporates where ownership has been divided through succession in one or more generations (Ahmed et al, 2008)

Another purpose of CG is to establish transparency and accountability throughout the corporate This is possible because the CG system is created on the premise of a tight distribution of power and responsibility among shareholders through the annual meeting, board of directors, executive board, and auditors

The characteristics of the director board are one of the groups of factors in CG and play a very important role in CG Within the scope of this study, the author will examine the influence of board characteristics on EM Particularly, the author will examine the moderating role of board characteristic factors in the relationship of EM, CSRD and CP, including: BI, BS, BA, BM, and BW

1.2.5 Tax Planning

According to VAS 17, TP opportunities are actions that the corporate would take in order to create or increase taxable income in a particular period before the expiry of a tax loss or tax credit carry forward For example, in some circumstances, taxable profit may be created or increased by: Deferring the claim for certain deductions from taxable profit, selling, and leasing back assets that have appreciated but for which the tax base has not been adjusted to reflect such appreciation; and

selling an asset that generates non-taxable income (such as a government bond) in order to purchase another investment that generates taxable income”

According to VAS 17, when TP opportunities advance taxable profit from a later period to an earlier period, the utilization of a tax loss or tax credit carry forward still depends on the existence of future taxable profit from sources other than future originating temporary differences

1.2.6 Current Tax Expense and Deferred Tax Expense

According to VAS 17, income tax expense (tax income) is the aggregate amount of current income tax expense (income) and deferred income tax expense (income) included in the determination of profit or loss for the period

According to VAS 17, CTE is the amount of income taxes payable or recoverable in respect of the current year tax profit and the current tax rates According to the accounting regime of Vietnam, Circular 200: CTE is the amount

of corporate income tax payable on taxable income during the year and the current corporate income tax rate; DTE is the amount of corporate income tax that will be payable in the future arising from the recognition of deferred income tax payable during the year, and the refund of deferred income tax assets that have been recognized from previous years

1.2.7 Deferred Tax Asset and Deferred Tax Liability

According to VAS 17, DTL is the amounts of income taxes payable in future periods in respect of taxable temporary differences in the current year Whereas, DTA is the amounts of income taxes recoverable in future periods in respect of: Deductible temporary differences, the carry forward of unused tax losses, and the carry forward of unused tax credits

1.3 Theoretical Framework

The theoretical framework applied in this study includes four foundational theories to explain the relationships among variables in the research model, on the basis of which to build a research framework and develop research hypotheses