Title: The impact of firm life cycle on abnormal earnings in financial statement quality: evidence from Vietnam

Authors: Nguyen-Quynh-Nhu Ngo; Uyen-Nhi Ly; Quynh-Mai Truong; Minh-Tri Ha

Addresses: Faculty of Finance and Banking, Ton Duc Thang University, Tan Phong Ward, District 7, Ho Chi Minh City, 70001, Vietnam ' Faculty of Business Administration, Ton Duc Thang University, Tan Phong Ward, District 7, Ho Chi Minh City, 70001, Vietnam ' Faculty of Business Administration, Ton Duc Thang University, Tan Phong Ward, District 7, Ho Chi Minh City, 70001, Vietnam ' School of Business, International University, Vietnam National University, Ho Chi Minh City, 70001, Vietnam

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.

Keywords: abnormal earnings; financial statement quality; firm life cycle; accounting smoothness; accounting conservatism; accounting relevance; Vietnam.

DOI: 10.1504/JGBA.2022.132953

Journal for Global Business Advancement, 2022 Vol.15 No.6, pp.686 - 713

Received: 08 Jun 2023
Accepted: 19 Jun 2023
Published online: 21 Aug 2023 *

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