Tóm tắt: ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAMCỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI

ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAM.ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAM.ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAM.ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAM.ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAM.ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAM.ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAM.ẢNH HƯỞNG CỦA CHÊNH LỆCH GIỮA LỢI NHUẬN KẾ TOÁN VÀ THU NHẬP CHỊU THUẾ ĐẾN TÍNH ỔN ĐỊNH CỦA LỢI NHUẬN TẠI CÁC CÔNG TY NIÊM YẾT TRÊN THỊ TRƯỜNG CHỨNG KHOÁN VIỆT NAM.

LE THI BAO NHU

THE EFFECT OF BOOK – TAX DIFFERENCES ON

EARNINGS PERSISTENCE

AT VIETNAM-LISTED COMPANIES

Major : Accounting Code : 9340301

SUMMARY OF THE THESIS

HO CHI MINH CITY – 2022

Thesis supervisor:

Associate Professor, PhD Mai Thi Hoang Minh

Reviewer 1: Reviewer 2: Reviewer 3:

The thesis will be presented to the Thesis Board at theUniversity of Economics Ho Chi Minh City

At…….hours…… day…….month………year………

This Thesis can be found at the library of University ofEconomics Ho Chi Minh City

Le Thi Bao Nhu The Impact of IFRS on Book – Tax Differences

and Income Tax in Vietnam, International Conference Proceedings: Vietnam Accountancy Future and Prospects, 2019,

ISBN: 978-604-60-3012-6, pp 315 – 318

Mai Thi Hoang Minh & Le Thi Bao Nhu Book-tax differencesand Accounting conservatism – Evidence from Vietnam,

Vietnam's Social-economic Develop, ISSN: 0868-359X, Volume

24, Issue 2, Number 98 July 2019, pp 47 – 62

Le Thi Bao Nhu, Nguyen Thi Thu Hau & Nguyen Thi KhanhVan Impact of Book – tax differences on the settlement and audit

of corporate income tax, Review of Finance, ISSN: 2615-8973,

Issue 2, 2020 (739), pp 52-54

Le Thi Bao Nhu, Nguyen Thi Thu Hao & Nguyen Thi HongHanh Factors affecting the corporate income tax compliance in

private enterprises in Ba Ria – Vung Tau province, A sub-journal

of VNUHCM Journal of Science and Technology Development,

1 The necessity of the topic

Earnings quality has been extensively researched in the literature(Kousenidis et al., 2013) Earnings persistence is regarded as a proxyfor earnings quality (P Dechow et al, 2010; Mohammady, 2010;Kousenidis et al, 2013) The difference between book income andtaxable income affects the earnings quality on financial statements,

so this information can help users forecast future earnings (Hanlon,2005; Tang, 2006; Lev and Nissim, 2004; H Choi et al, 2020) Somepolicymakers and journalists argue that disclosure of information onbook-tax differences (BTD) and companies with large BTD isrequired because these companies may be manipulating data for theaccounting, tax, or both purposes (Hanlon and Heitzman, 2010).Many recent studies on the relationship between BTD andpersistence of earnings and accruals, such as Mills and Newberry(2001), have provided evidence that the magnitude of BTD has apositive relationship with many financial statement items Phillips et

al (2003) expand on this study, demonstrating that deferred taxexpense provides useful information about earnings management viatotal accruals and discretionary accruals from the Jones (1991) andModified Jones (1991) models (Patricia M Dechow et al., 1995).According to Joos et al (2000), when BTD (in absolute value) islarge, the relationship between pre-tax and after-tax earnings isweaker, indicating that the manager should use BTD as anopportunity for earnings management

Investors will recognize that earnings have been managed, lowering

their confidence in reported earnings BTD affects earnings andaccruals quality (Blaylock et al, 2012; Hanlon, 2005; Xie, 2001).Similarly, Blaylock et al (2012) demonstrate that BTD sources fromearnings management, tax avoidance, and differences betweenaccounting and tax regulations all affect the persistence of earningsand accruals Tang (2007) provides some empirical evidence thatBTD is useful for earnings management and tax management afteraccounting and tax differences in data recognition on reports areremoved It can be seen that previous studies focused on managers'perceptions of recording accruals without considering cash flowpersistence; this issue was mentioned in (Hanlon, 2005) but did notconduct experimental research (Jeong and Choi, 2019).

Since 2013, Vietnam's tax policy has been regularly revised not only

to help businesses but also to improve corporate income taxcompliance (Loan et al., 2018) Tax evasion is becoming morecommon, as both foreign and domestic businesses use loopholes andincentives in Vietnam's corporate income tax law to reduce their taxobligations This situation reduces the state's revenue, which can lead

to inequitable social resource allocation and have a negative impact

on the economy (Ha et al., 2021) Due to concerns about tax evasion,corporate income tax inspection is becoming more interested andenhanced, thereby increasing government revenue and increasing taxrates for taxpayers

At the same time, the problem of data differences before and afterthe audit is emerging in Vietnam's stock market, particularly inearnings (Nguyễn Việt and Nguyễn Văn Hưng, 2017) Therefore, it

is also necessary to analyze and comprehend information about BTD,such as the distinction between book and taxable income, the

persistence of earnings, and their components Although there havebeen extensive studies on BTD and its relationship with thepersistence of earnings and accruals around the world, there has beenlittle research to clarify the above issue for enterprises in developingcountries like Vietnam.

At the same time, Vietnam is gradually integrating into internationalaccounting, moving closer to IFRS, with Circular No 200/2014/TT-BTC (Circular 200) being promulgated for the presentation offinancial statements since 2015 (Phan et al., 2018)

From the foregoing, the thesis' main contribution is to address theshortcomings of previous studies based on (Blaylock et al., 2012;Hanlon, 2005) to examine the influence of BTD on the persistence ofearnings and earnings components at companies listed on theVietnam stock exchange over the last ten years

As previously stated, BTD is the difference between book andtaxable income The study differs from previous studies in threeways: (1) it compares the persistence of earnings and theircomponents before and after the implementation of Circular 200; (2)

it considers the effect of BTD and its source on the persistence ofcash flow, thereby assessing earnings persistence; and (3) itcompares the effects of BTD and its source on the persistence ofearnings and their components over the two research periods.Furthermore, the method for calculating BTD, as well as identifyingobservations in the group of earnings management or tax avoidance,

is all based on new approaches that are appropriate in the Vietnamcontext and eliminate the influence of the corporate tax rate changes

in recent years

2 The economic context of Vietnam

3 Research objective

This thesis aims to measure the persistence of earnings and theircomponents and determine the influence of BTD and the source ofBTD on this persistence The thesis also explores the differencebetween the persistence of earnings and their components under theinfluence of BTD through the period of applying the accountingregime in Vietnam

4 Research questions

The thesis focuses on answering the following questions in order toachieve the research goal:

Question 1: How is the persistence of earnings and their components

in Vietnam? Is there a difference in persistence before and after theapplication of Circular 200?

Question 2: How does BTD affect earnings persistence and itscomponents? Is there a difference between this effect before andafter the application of Circular 200?

Question 3: How do the sources of BTD affect earnings persistenceand its components? Is there a difference between this effect beforeand after the application of Circular 200?

5 Subjects and scope of the research

5.1 Research subjects

Research subjects include: The persistence of earnings, thepersistence of earnings components, BTD, source of BTD atVietnam-listed companies

5.2 The scope of research

Vietnam listed companies, including the Ho Chi Minh StockExchange (HOSE) and Hanoi Stock Exchange (HNX) with datacollected from 2010 to 2019 This is the time when listed companies'

financial statements are made available in their entirety At the sametime, the company's operations are hampered by an adverseoperating environment, such as the Covid-19 epidemic that ravagedVietnam in 2020 and 2021, affecting earnings and financial targets.Therefore, the author did not update this study period over the course

of two years

Excluded from the sample of companies: (1) There are fewobservations collected due to the new listing, (2) companies in thebanking, finance, and insurance industries due to their specificoperating regulations, (3) companies that do not collect the necessarydata in their financial statements for three consecutive years, (4)companies do not apply 200 after 2014

of the accounting regime on earnings persistence by comparingresults before and after the application of Circular 200 Thisaccounting regime's impact on earnings persistence is alsodemonstrated in the thesis These are important for accounting andtax research, as well as broadening understanding of the relationshipbetween BTD and earnings persistence, as well as its components, in

the Vietnamese context The study also serves as a foundation forfuture research on BTD, their source, earnings persistence, and itscomponents.

Practical contributions

The findings contribute to improving the quality of predicting futureearnings by clarifying the persistence of earnings and theircomponents; as a result, it is important for investors and shareholders

to analyze the future financial position in order to make effectiveinvestment decisions and competitive strategies

Managers and chief accountants have more information to manageearnings and improve earnings quality, update tax-accountingregulations, and comply with the regulations of recordingtransactions in periods of applying different accounting regimes afterstudying the influence of BTD and its source on the persistence ofearnings and its components

Furthermore, the findings will be used to provide state agencies andpolicymakers with more information to help them manage businessesand develop scientific accounting and tax principles and regimes thatadhere to international accounting standards

8 Structure of the thesis

Chapter 1: Research overview

Chapter 2: Theoretical basis and research hypothesis

Chapter 3: Research methodology

Chapter 4: Research results and discussion

Chapter 5: Conclusion and implications

CHAPTER 1: RESEARCH OVERVIEW

1.2 Results from previous studies

Research on the persistence of earnings and their components

So early on, studies on the persistence of earnings and theircomponents were conducted (since 1969) The researchers mostlyproved that earnings are persistent, with current year earningsinfluencing future year earnings using a variety of methods At thesame time, the components of current year earnings affect futureearnings, with the cash flow component being more persistent andhaving a greater impact on future earnings than the accrualscomponent

Research on the effect of BTD on the persistence of earnings and its components

The relationship between BTD and earnings quality has primarilybeen studied in two directions, which will be the basis for manyfuture studies:

In the first direction, Lev and Nissim (2004) demonstrate that totalBTD provides information about future earnings, whereas temporaryBTD is unrelated to earnings change.

The second direction shows that temporary BTD has a negativeeffect on the persistence of pre-tax earnings (Hanlon, 2005; Phillips

et al., 2003)

Following these two lines of inquiry, the authors later classifiedBTDs and investigated their impact on earnings persistence.Depending on the research perspective and the institutionalenvironment, each of the above categories has different implicationsfor the persistence of earnings and their components The majority ofstudies found that BTD has a positive (or negative) impact onearnings and accruals persistence However, when controlling forfactors such as years of operation, each country's legal system, andshareholder information needs, the results are inconsistent There arevery few studies on the relationship between BTD and the cash flowcomponent, and the results of these studies are also heterogeneous,mainly concentrated in developed countries with relatively stableaccounting and tax systems There is rarely a paper on the impact ofBTD on the persistence of earnings and its components in developingcountries

Study on the influence of the BTD’s source on the persistence of earnings and its components

According to global studies, the source of BTD is tax avoidance,earnings management, or the difference between accountingregulation and tax law Depending on the sample and researchmethod, the influence of the aforementioned sources on thepersistence of earnings and accruals components can be positive or

negative There have been few studies on the effects of BTD sources

on cash flow persistence

There are few published reports in Vietnam on the effects of BTDand the sources of BTD on earnings persistence and its components.However, there have been some studies on the persistence ofearnings and its components, as well as other studies on the factorsinfluencing earnings quality and how BTD affects financialstatement information Furthermore, a few studies discuss howfactors such as earnings management, tax avoidance, and thedisparity between accounting regulations and tax law affectperformance There are few articles on this topic, and the researchmethod is still simple, but it provides some evidence and directionsfor future research There are still gaps in the literature in Vietnamand other developing countries regarding earnings persistence andearnings prediction under the influence of BTD that need to beinvestigated

1.3 Research gap

For starters, there is rarely research that provides a comprehensiveview of the persistence of earnings and their components forVietnam-listed companies over the last ten years

Second, there has been little research on the impact of BTD on theaccruals and cash flow components

Third, there has been little research on the effects of BTD on thepersistence of earnings and its components in developing countries,including Vietnam

Fourth, there have been few papers on the effects of BTD sources onearnings persistence and its components in developing countries such

as Vietnam

2.1.2 Income taxes

The gain (or loss) in the period used to calculate the amount of CITthat the business must pay is referred to as taxable income (orrecovery) The provisions of tax law are used to determine thesegains (or losses)

2.1.3 Persistence of earnings

Earnings persistence is an indicator of earnings quality Earningspersistence means that earnings from the current year can bemaintained and persisted in earnings from the following year.Earnings are persistent in terms of econometrics if the value isconstant or if the value over time follows the probability distribution

2.1.4 Persistence of earningscomponents

Earnings components are persistent, which means that their value inthe current year will be maintained and persisted in the future