Impact of transactions with related parties on behavior manipulation of profits using the accrued earnings management

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

The purpose of this study is to examine the relationship between related party transactions (RPTs) and profit manipulation. Researching this relationship is necessary when Vietnam is approaching the International Financial Reporting Standards (IFRS), and transactions with related parties arise as normal economic transactions (Khuong et al., 2024). Therefore, this study used the variable measuring earnings manipulation behavior as the level of manipulation based on accrual earnings management (AEM). The data used is from 56 non-financial enterprises with an average capital size of VND 2,000–10,000 billion and listed on the Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) in the period of 2018–2021, collected from S&P Global and financial reports published by the companies. After collection, the data is processed and cleaned in Excel, and a regression model is built using Stata software. The author is using ordinary least squares (OLS), fixed effects model (FEM), random effects model (REM), and feasible generalized least squares (FGLS) methods to test model error. The regression results show that RPTs and financial leverage have a positive and the size of total assets and audit quality have a negative impact on earnings manipulation on an accrual basis. From the results of empirical research, the study has made a number of appropriate policy recommendations to minimize profit manipulation in enterprises.

Keywords: Manipulation of Profits, Acquisition Basis, Related Party Transactions

Authors’ individual contribution: Conceptualization — T.K.P.N.; Methodology — T.L.T.N.; Validation — T.K.P.N.; Writing — Review & Editing — T.K.P.N., T.L.T.N., D.L.N., and T.L.N.; Visualization — T.K.P.N.; Supervision — T.L.T.N.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G32, M40, M41

Received: 22.11.2024
Revised: 19.03.2025; 01.06.2025; 17.10.2025
Accepted: 20.11.2025
Published online: 24.11.2025

How to cite this paper: Nguyen, T. K. P., Nguyen, T. L. T., Nguyen, D. L., & Nguyen, T. L. (2025). Impact of transactions with related parties on behavior manipulation of profits using the accrued earnings management [Special issue]. Journal of Governance and Regulation, 14(4), 299–307. https://doi.org/10.22495/jgrv14i4siart7