The impact of firm life cycle on abnormal earnings in financial statement quality: evidence from Vietnam Online publication date: Mon, 21-Aug-2023
by Nguyen-Quynh-Nhu Ngo; Uyen-Nhi Ly; Quynh-Mai Truong; Minh-Tri Ha
J. for Global Business Advancement (JGBA), Vol. 15, No. 6, 2022
Abstract: This study demonstrates that the quality of financial statements changes dramatically during the life cycle of a corporation. Accrual quality, earnings smoothness, accounting conservatism, accounting relevance and ethical earnings were utilised to test the firm financial statement quality in different ways for non-financial listed firms, with 32,852 observations made from 337 companies in Vietnam. Growing businesses have better financial statements than those that are in the introduction stage, and businesses that are declining are likely to manipulate their real earnings the most. Notwithstanding that, growth and mature enterprises which spend high-level expenses during the year might mean that the quality of their financial statements would soar. On the contrary, the more expenses that are showing in the following year, the more mitigated the financial statement quality is. Overall, the study's findings help us to have a better understanding of how different life cycle stages can affect diversity in financial reporting quality.
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