The Impact of Auditor Specialization and Banks' Listing Status on Earnings Management in Vietnamese Commercial Banks

This study investigates the impact of auditor specialization and listing status on earnings management in Vietnamese commercial banks. Discretionary loan loss provisions (LLP) is used as a proxy for earnings management. Based on a sample of 21 banks in the period 2008-2017, the findings show that: First, auditor specialization does not have a significant impact on constraining earnings management in the banks. Second, listed banks engage more in earnings management. In addition, listed banks report more income-increasing LLP, while non-listed banks report more income-decreasing LLP. The results are consistent with a number of prior studies that find no evidence of specialist auditors curtailing earnings management, and listed firms participating more in managing income. The results have important implications for government authorities in improving the legal framework over the preparation of banks' financial statements, including revision of the accounting standards and alignment of the accounting standards with other banking regulations.