Tóm tắt: Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.

Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam.

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY

SUMMARY OF THE DISSERTATION

Ho Chi Minh City, 2023

The dissertation is prepared at:

University of Economics Ho Chi Minh City

Academic advisors:

1 Prof, Dr Vo, Xuan Vinh

2 Prof Jonathan A, Batten

ABSTRACT Purpose

The goals of this thesis are to investigate the influence of ownership structure on accounting conservatism and the benefits of accounting conservatism on firm performance in Vietnam context The literature review shows that ownership structure has an effect on accounting conservatism and accounting conservatism also has a positive effect on the firm performance in countries around the world, however, the findings have not been consistent In addition, there are a few studies that provide evidence on the relationship between ownership structure and accounting conservatism, especially ownership concentration, institutional ownership in the Vietnam context Regarding the impact of accounting conservatism on the firm performance, there are limited

studies on this issue until the time the thesis conducts the research in the Vietnam context

Design/methodology/approach

The research sample was selected from non-financial companies listed on the Ho Chi Minh City Stock Exchange in the period from 2012 to 2020 Data were collected from consolidated financial statements, annual reports, market prices and volume of trade are collected from the Ho Chi Minh City Stock Exchange The panel data methodology is used to test the developed hypotheses The thesis uses three popular methods to measure accounting conservatism: asymmetric timeliness (Basu, 1997), asymmetric timeliness score developed by Khan and Watts (2009) and accrual-based method developed by Ahmed and Duellman (2007) Accounting-based measures and market-based measure are used to measure the firm performance For ownership structure variable, it is classified into ownership concentration and ownership type Ownership type consists of managerial ownership, institutional ownership, foreign ownership and state ownership

Findings

In respect of the effect of ownership structure on conservatism, the results display as expected In particularly, higher institutional ownership, foreign ownership, state ownership leads to more conservatism; however, higher managerial ownership, ownership concentration leads to lower conservatism Additionally, companies

adopted more accounting conservatism principle are shown that the firm performance have better

Originality/value

The findings of this study contribute to the literature of ownership structure and accounting conservatism in the context of frontier market in Vietnam This study also gives some useful implications for policymakers, practice of accounting, researchers, and users of accounting information in financial statements in Vietnam

context

Keywords: Accounting conservatism; Ownership structure; A frontier market; Firm performance

INTRODUCTION

1 Motivation for research

Accounting conservatism is an age-old and common feature of financial accounting (Biddle et al., 2022) There are different definitions of accounting conservatism, such as Basu (1997), Givoly and Hayn (2000), Watts (2003) In accounting, conservatism improves the reliability of financial statements by limiting the opportunistic behaviors of company management (Ball and Shivakumar, 2005; Watts, 2003; Mora and Walker 2015) Ownership structure is formed from the nature of shareholders and respective shares It represents ownership agreements and is the basis for determining a company's control structure, the foundation of governance of company For listed companies, Watts (1993) states that accounting conservatism is affected by

a variety of governance factors The performance information of a company cannot be separated from the use

of accounting principles applied when preparing the financial statements (Zulfikara et al., 2020) The quality

of the profit information in income statement is influenced by factors such as compliance with accounting principles (Penman and Zhang, 2002) According to LaFond and Watts (2008), conservatism can reduce manipulation of financial statements and reduce agency costs, which in turn will increase corporate profits and subsequently improve firm performance

This study research on adoption of accounting conservatism principle in Vietnamese listed firms' financial statements, the impact of ownership structure on the level of accounting conservatism in the financial statements as well as consequence economic of accounting conservatism on firm performance in Vietnamese listed firm Previous studies suggest that ownership structure can impact the use of accounting conservatism, with closely held companies being more likely to use conservative accounting International research suggests that accounting conservatism can have a positive impact on firm performance, particularly in industries that are more prone to financial distress (Ramalingegowda and Yu, 2018, Mohd et al., 2020; Cui et al., 2021) However, the studies on these issues in Vietnam context are limited

Vietnam is a civil law country (An, 2022) and is one of the dynamic and growing emerging markets with its unique legal, cultural, and institutional characteristics (Le et al., 2021) In addition, Vietnam is a frontier equity market that having typical characteristic with high ownership concentration and weak investor protection (Tran and Le, 2020) Financial reporting practices vary from country to country, it is a matter which are interested in understanding by Global investors, as well as how the particular institutional structure of each country affects the quality of financial reporting (Le and Moore, 2021) Currently, the situation of disclosing information about financial statements of companies listed on the Vietnamese stock market has significantly improve, information about the financial situation of enterprises is more and more transparent However, according to representative of State Securities Commission of Vietnam (SCC), in fact, there are still shortcomings and violations This causes loss of public confidence in the stock market as well as difficulties for State management agencies Vietnam is trying to improve its accounting practice, implementing and encouraging adoption of IFRS Therefore, this should improve investor confidence and reduce investment risk premiums

For the above-mentioned reasons, these facts should motivate analysis in this study In particularly, some matters needs must be examined such as whether the adopting of accounting conservatism principle is ensured

in Vietnamese listed firm's financial statements, whether ownership structure impact on accounting conservatism, besides, the consequence of accounting conservatism in Vietnamese listed companies Therefore, the thesis decided to choose the topic “Ownership structure, Accounting Conservatism and Firm Performance: Evidence from Vietnam” to implement the doctoral thesis

2 Research objective

(1) Whether there is an adoption of accounting conservatism principle in Vietnamese listed firms' financial statements;

(2) Whether there is a relationship between ownership structure and the level of accounting conservatism

in Vietnamese listed firms;

(3) Whether there is a relationship between the level of accounting conservatism and firm performance in the Vietnamese listed firms

3 Research questions

Question 1: Is there an adoption of accounting conservatism principle in Vietnamese listed firms' financial statements?

Question 2: Is there a relationship between ownership structure and the level of accounting conservatism

in Vietnamese listed firms?

Question 3: Is there a relationship between the level of accounting conservatism and firm performance in the Vietnamese listed firms?

4 Methodology

This study mainly applied quantitative research method The research is carried out based on popular fundamental theories such as the agency theory, political cost theory, signal theory, positive accounting theory and based on the previous studies related to measuring accounting conservatism, the effect of ownership structure on accounting conservatism as well as the effect of accounting conservatism on firm performance to determine the research model and test the hypotheses in Vietnam context

5 Research subjects and research scope

 Research subjects: The thesis studies the situation of adopting conservatism principle; the impact of ownership structure on the level of accounting conservatism and impact of the level of accounting conservatism

on firm performance of Vietnamese listed companies

 Scope of the study

About space: This study focuses on non-financial companies listed on HOSE in the Vietnamese Stock Exchange as the research sample

About time: The thesis conducts empirical research on the final database of companies listed on HOSE in

Vietnam over the period from 2012 to 2020

About content:

About ownership structure: Ownership concentration; Managerial ownership; Institutional ownership; Foreign ownership; State ownership

About the level of accounting conservatism: The thesis focuses on the conditional conservatism

Regarding firm performance: This study measures the firm performance through both accounting-based and market-based measures

6 Contribution of the thesis

Theoretical contribution:

The first, the thesis synthesis and evaluates the measurement of accounting conservatism, from which, the thesis recognizes the advantages and limitations of each measurement and selects an appropriate method to measure accounting conservatism for companies listed on the Vietnamese stock market

The second valuable contribution is related to measure accounting conservatism In order to test the impact

of ownership structure on accounting conservatism in accordance with the characteristics in the Vietnam

context, the thesis uses alternative measures of accounting conservatism such as earnings/stock return measures (Basu, 1997; Khan and Watts, 2009) and income statement measures (Ahmed & Duellman, 2007) Besides, the thesis also explores the impact of accounting conservatism on the firm performance by measuring the performance based on both accounting and market aspects (Demsetz and Villalonga, 2001) The findings

of this study additional the evidence on relationship between ownership structure and accounting conservatism

as well as the benefit of accounting conservatism by using a multi-perspective approach to accounting conservatism and firm performance in Vietnamese listed firms, especially, the firm-specific asymmetric timeliness score

The third contribution of this study is that through the findings of the thesis, they are possible partly supplement the results of previous studies which are not consistent on the relationship between ownership structure and accounting conservatism At the same time, it also adds research results on the relationship between institutional ownership, ownership concentration and accounting conservatism that there are limited studies implementing in the Vietnam context Thus, the thesis provides a comprehensive empirical study on the relationship between ownership structure and accounting conservatism of listed firms in Vietnam's stock market

Last but not least, with accounting conservatism measured by earnings/stock return measures, this study provides evidence about the benefits of accounting conservatism on firm performance in Vietnam context It

is complementary to evidence of previous studies in the aspect of a positive relation between accounting conservatism and firm performance in frontier market

Practical contributions:

Firstly, providing the status of compliance with the principle of accounting conservatism both from the perspective of the whole market and firm - year level in listed firms in Vietnam stock market through a multi-perspective approach

Secondly, the thesis helps accountants, managers and the users of accounting information have full information about the level of accounting conservatism in financial statements They can recognize the importance of the principle of accounting conservatism, the impact of the practice of conservatism and the method of measuring it so that they can consider applying the principle of conservatism appropriately to provide more useful and reliable financial statement information In addition, the content related to the principle of conservatism, the relationship between ownership structure and the level of accounting conservatism may help investors and other stakeholders analyze more deeply the factors affecting the quality

of financial statement's information in order to have a basis for making the most effective economic decisions Thirdly, the thesis provides empirical evidence on the influence of ownership structure on the level of accounting conservatism and the impact of the level of accounting conservatism on the firm performance, thereby analyzing, evaluate and make recommendations for listed firms, investors, policymakers and other stakeholders Particularly, the results of this study may help policy-makers have a picture about the impact of ownership structure on the level of accounting conservatism and the benefit of accounting conservatism in order to have a mechanism to protect minority shareholders from the dominance of ownership structure in Vietnamese listed firms

7 Thesis structure

The thesis is arranged as follows: Chapter 1: Literature reviews; Chapter 2: Conceptual framework and hypotheses; Chapter 3: Research methodology; Chapter 4: Results and Discussion; Chapter 5: Conclusion and recommendations

CHAPTER 1: LITERATURE REVIEW 1.1 Research concepts

1.1.1 Accounting conservatism

Basu (1997) defines conservatism as the tendency to demand high recognition of good news rather than bad news in the income statement Givoly and Hayn (2000) argues that conservatism is an accounting tool that leads to faster expense recognition and slower revenue recognition Watts (2003) defines conservatism as the asymmetric timeliness in recognizing loss versus gain For accountants, they cannot ignore the concept of conservatism Conservatism can briefly understand that if there is no certainty in a transaction, the accountant may make estimates and record all probable losses, however, do not recognize the probable profits if there is

no solid evidence

1.1.2 Ownership structure

Ownership structure is an important topic in the overall concept of corporate governance (Tran and Dang, 2021), and interested by many researchers in the corporate governance system Follow to Jensen and Meckling (1976), "ownership structure" indicate the share held between members inside and outside company as well as between investors have role direct and not direct management In addition, the ownership structure is an important role for attracting large amounts of capital for listed firms and creating wealth Consistent with Anh (2019), ownership variables are divided into two groups: ownership concentration and ownership structure

type

1.1.2.1 Ownership concentration

Ownership concentration is defined as the majority of equity capital in the company owned by a shareholder, this shareholder can be an individual or a group of individuals or organization, they have a right

to participate in decision-making in the company Major shareholders are allowed to participate in the board

of directors and exercise control over the operation of the company

1.1.2.2 Ownership structure type

In terms of the characteristics of shareholders, the researchers divide the types of ownership structures into the following groups: Managerial ownership (MANA): The number of shares held by senior managers divided

by total number of shares outstanding (Liu, 2019; El-habashy, 2019; Sugiarto and Fachrurrozie, 2018; Mohammed et al., 2017; Ahmed and Henry, 2012); Institutional ownership (INSTI): The number of shares held by institutional investors divided by total number of shares outstanding (El-habashy, 2019; Ramalingegowda and Yu, 2012; Chi et al., 2009; Lin, 2016; Ahmed and Henry, 2012); Foreign ownership (FORE): The number of shares held by foreign investors divided by the total number of shares outstanding (Khalil et al., 2019; Liu, 2019; Alkurdi et al., 2017); State ownership (STATE): The number of state-owned shares divided by the total number of shares outstanding (Alkurdi et al., 2017)

1.1.3 Firm performance

The performance of the company is an indicator that most users of accounting information are interested (Osadchy et al., 2018), it is measured through financial and non-financial indicators (Ahmed et al., 2016) In accounting, firm performance is widely used mainly related to financial information, specifically, profitability measurement to reflect the ability achieve the objectives of the company (Mohd et al., 2020) Most research

on corporate governance use either accounting-based measures (El-habashy, 2019) or market-based measures (Bhagat and Bolton, 2008)

1.2 Summary methods on the measurement of accounting conservatism

There are many methods, which are used to proxy accounting conservatism The literature provides some measurements that are frequently used consisting of market-to-book (MTB), earnings, accruals, accruals/cash flows relation and earnings/stock return relation measures These measurements are stratified into a balance sheet measure, income statement measures, Earnings/stock return relation measures (Zhong and Li, 2017)

1.3 Research on the relationship between ownership structure and accounting conservatism

1.3.1 Ownership concentration and accounting conservatism

Theoretically, majority shareholders have two attitudes of the effect on financial statements Firstly, they intervene directly business activities in the companies Secondly, in order to serve their own personal interests, they may collect and seek information based on their own advantage or impact on manager’s decisions (El-habashy, 2019) Empirically, the findings on association of Ownership concentration and accounting conservatism are not consistent

Research results of Nguyen et al (2017) show that ownership concentration prevents independent directors from performing their supervisory function in governance, therefore, it makes negatively affects firm performance with Vietnam context In another, study of Tran and Dang (2021) exploring the influence of ownership concentration on earnings management in emerging countries and Vietnam, the results show that the degree of ownership concentration does not affect earnings management Nguyen et al (2022) find that ownership concentration has a negative relationship with accounting conservatism in Vietnam context 1.3.2 Ownership type and accounting conservatism

1.3.2.1 Managerial ownership and accounting conservatism

Theoretically, managerial ownership helps to control the practice of earning management, lead to enhances the accounting information quality (Ellili, 2013) El-habashy (2019) also suggests that companies are high managerial ownership, that means the manager who is an agent, and an owner of the company at the same time This is able to weaken agency conflict problems and have more demand accounting conservatism However, follow to positive accounting theory, managements base on their advantage to boost the earnings to improve their benefits With the argues of Ball (2001), Lafond and Roychowdhury (2008) give hypothesis and find that accounting conservatism is negatively related to managerial ownership Empirically, the findings on association of managerial ownership and accounting conservatism are not consistent In Vietnam context, the study of Nguyen (2019) also found that managerial ownership is negatively associated with accounting conservatism

1.3.2.2 Institutional ownership and accounting conservatism

Theoretically, in corporate governance, institutional investors are considered as critical role, especially, in the developed markets (Liu, 2019) Jensen (1993) contends that institutional investors are active investments, play an important role in the corporate governance system, and participate in independent and objective control

of the company Therefore, they demand timeliness and reliable information to help them make better oversight

of the company's activities and participate in planning the company's business strategy (Bushman et al., 2004; Jensen, 1993) Empirically, previous studies on the association between institutional ownership and accounting conservatism have shown mixed findings Regarding institutional ownership, Vo (2016a) shows that institutional ownership plays an important role in maintaining stability in emerging stock markets, specifically Vietnam The results of Ha and Hiep (2019) show that institutional ownership has a significant impact on firm performance As far as this thesis knows, the study has not found previous research investigating the

relationship between institutional ownership and accounting conservatism of listed companies in Vietnam context

1.3.2.3 Foreign ownership and accounting conservatism

Theoretically, foreign ownership are investors that they are attracted by large investment in the company, this occurs problems which have associated with the low degree of asymmetry information (Fan and Wong, 2002; Lafond and Roychowdhury, 2008; LaFond and Watts, 2008) Based on previous studies, An (2015) argued that foreign shareholders likely play a valuable controlling role as a large institutional investor, external controlling by foreign ownership is considered as large institutional investors that curb the opportunities for discretionary choices of management in providing financial accounting information, therefore lead to enhance the quality of financial reporting Kho et al (2009) offer that the company gain benefits if existing the foreign shareholders who come from countries have good corporate governance and control over companies And they also indicate that conservatism make a decrease the handling of accounting data and claim more utilizing of financial reporting in contracting and communicating, therefore, increasing demand for accounting conservatism practices (Ball and Shivakumar, 2005) Empirically, previous studies on the impact of foreign ownership on accounting conservatism provide evidence of a positive relationship between them Studies in Vietnam have opposite results Le et al (2017) and Le et al (2021) indicate that foreign ownership is negatively related to accounting conservatism However, Dang and Tran (2020) state that the relationship between foreign ownership and accounting conservatism is negative with accounting conservatism measured follow Ball and Shivakumar (2005) model, in contrast, it is not significant when accounting conservatism measured by Givoly and Hayn (2000) model This shows that the research results in Vietnam context on this issue are sensitive to the measures of accounting conservatism

1.3.2.4 State ownership and accounting conservatism

Theoretically, there are two competing views in the literature First stream shows that the higher state ownership effect management monitoring, particularly, it makes controlling system less effective and finally, lead to increase agency problems (Armstrong et al., 2010; Firth et al., 2007) Second stream indicates that state ownership reduces agency issues Since the State as a shareholder and take control, they have an interest in both maximizing profits and control over the company, then their interests will be protected (Shleifer and Vishny, 1997) Empirically, there are many studies on the impact of state ownership on accounting conservatism, specifically whether state ownership encourages or discourages conservatism, the results of which provide mixed evidence (Cullinan et al., 2012) The evidence of studies in Vietnam context are not consistent Nguyen (2019) and Le et al (2021) found that state ownership is negatively associated with accounting conservatism Do (2022) find that state ownership has a positive impact on accounting conservatism However, Dang and Tran (2020) provide the evidence that there is no significant relation between accounting conservatism and state ownership

1.4 Research on the relationship between accounting conservatism and firm performance

Theoretically, Bushman et al (2001) and Lambert et al (2007) suggest that accounting conservatism is expected to improve firm performance by providing managers with sufficient information to support the decision-making According to LaFond and Watts (2008), the principle of conservatism can alleviate the manipulation of financial statements and decrease agency costs Decreasing agency costs will improve company profits and subsequently enhance firm performance Ahmed and Duellman (2007) provide the evidence that the company is more conservatism, more efficient to invest Lim (2011) argues that the performance of the company is attribute to the conservatism in accounting Previous researches provide

empirical evidence that conditional conservatism leads to high firm value through alleviating asymmetric information, decreasing the capital cost, enhancing efficient investment by way of improved monitoring and contracting (Lafond and Roychowdhury, 2008; Francis and Martin, 2010; Ahmed and Duellman, 2011; Lara

et al., 2011; Artiach and Clarkson, 2014; Kim et al., 2013; Balakrishnan et al., 2016; Ha and Feng, 2018) Contrary to the above arguments, there is a view that accounting conservatism reduces the value relevance of financial statements (Ugwunta and Ugwuanyi, 2019) Particularly, Feltham and Ohlson (1995); Basu (1997); and Penman and Zhang (2002) argue that earnings which generated from accounting conservatism is less relevant According to contingency theory, there is a difference in the relationship between accounting conservatism and firm performance under different institutional environments (El-habashy, 2019) Therefore, the benefits of accounting conservatism and its economic consequences is ongoing debates (Ardiansyah, 2022) Empirically, studies on the effects of accounting conservatism on firm performance mainly focus on in developed and developing economies in recent years and the results provide the inconsistent findings on the consequence of accounting conservatism In Vietnam context, studies on the impact of accounting conservatism and firm performance are limit The researches focus on the relation of accounting conservatism

on factor such as the dividend policy of enterprises in Vietnam and the effect of earnings quality level on firm value

Second, about the consequence of accounting conservatism, most of studies have done in developed and developing economies such as, Sana'a (2016) in Jordan, Ramalingegowda and Yu (2018) in U.S, Ugwunta and Ugwuanyi (2019) in Nigeria, Mohd et al (2020) in Malaysia, Cui et al (2021) in China, and Al-Fasfus et al (2022) in Amman The benefits of accounting conservatism and its economic consequences is ongoing debates (Ardiansyah, 2022) According to contingency theory, the relationship between accounting conservatism and firm performance varies according to the institutional environment (El-habashy, 2019) In addition, previous studies provide the inconsistent findings on the consequence of accounting conservatism In Vietnam context,

as far as the thesis knows, studies on the impact of accounting conservatism and firm performance are limited Third, regarding the measurement method of accounting conservatism, in the Vietnamese context, most previous studies mainly focused on measuring accounting conservatism according to the model of Basu’s 1997; Givoly and Hayn (2000); Ball and Shivakumar (2005); Ahmed and Duellman (2007) There is a method

of measuring the level of accounting conservatism that is quite popular and applied by many overseas studies, that is the model of Khan & Watts (2009) This model is developed from the model of Basu (1997), measuring the level of accounting conservatism through the firm-specific asymmetric timeliness score (C_SCORE) Basing on the literature review, the author finds that this model has not been widely applied in the Vietnamese context

CHAPTER 2: CONCEPTUAL FRAMEWORK AND HYPOTHESES 2.1 Theoretical framework

2.1.1 The agency theory

Agency theory was set forth by Jensen and Meckling (1976) Corporate governance is researched mainly depending on agency theory (Abdullah, 2006), which points out the relation between principals (Shareholders) and agents (Managers) Agency theory examines the relationship between the owner and manager of the company Agency theory indicates that the separation between owners and managers creates problems because each party will always maximize its own interests This relationship will give rise to an information asymmetry between management and owners known as agency problem This problem can be resolved by a system known

as the mechanism of good corporate governance by reducing conflicts between the principals and agents (Subramaniam, 2006) When applied to the thesis, the thesis would expect that higher the managerial ownership and ownership concentration, lower the level of accounting conservatism

2.1.2 Political cost theory

Political cost theory indicates that in order to minimize potential political costs, long-term oriented firms will publish information to increase the positive impact on their image and avoid the attention of the public and the regulators (Birt et al., 2006; Deegan and Rankin, 1996) This theory also posits that companies subject

to strict supervision from regulatory authorities (such as companies with state-owned capital) tend to increase information disclosure to avoid interference of the public regulations (Watts and Zimmerman, 1986) When applied to the thesis, the thesis would expect that higher the institutional ownership, foreign ownership and state ownership, higher the level of accounting conservatism

2.1.3 The signaling theory

The signaling theory is based on the contributions of two studies by Arrow (1972) and Schipper (1981) This theory is used to describe the behavior of two parties (individuals or organizations) when they have different access to information Usually, one party (the sender) must choose whether and how to communicate (or signal) that information, and the other party (the receiver) must choose how to interpret the signal (Connelly

et al., 2011) Signaling theory solves the problem of information asymmetry between firms and investors According to this theory, companies must voluntarily disclose information to the market and send signals to investors, such as the signaling model, to make a difference in the quality of their performance compared to another company When applied to the research, based on the explanation of this theory, the thesis would expect the higher institutional ownership, foreign ownership and state ownership that should have provided quality financial statements, leading to higher the level of accounting conservatism

2.1.4 The positive accounting theory

The positive accounting theory was first discovered by Beaver (1968) Then, positive accounting theory was recognized by the research of Watts and Zimmerman (1978) This theory mainly explains and predicts the use of an appropriate accounting method for an entity, it does not indicate which method is appropriate to recommend companies to adopt (Watts and Zimmerman, 1986) When applied to the research, the thesis would expect that the company with higher of the level of accounting conservatism, have higher firm performance 2.2 Hypotheses and conceptual framework

2.2.1 Hypotheses development

2.2.1.1 The relationship between ownership concentration and accounting conservatism

The literature review proposes that a high concentration of ownership leads to a lack of incentives for shareholders to monitor the company's operations, less participation in making decision and control over the

implementation of accounting policies as conservatism in accounting The evidence of Cullinan et al (2012) indicate that ownership concentration have negative relation with accounting conservatism With the sample

of Egypt, El-habashy (2019) also found that higher the ownership of block holders are correlated with a less level of accounting conservatism and will generate low accounting information quality, which approves that the largest shareholders acquire personal benefits or impact the manager’s decisions Vietnamese enterprises have a high concentration of ownership structure, with a weak and underdeveloped national governance system like that of Vietnam, this concentration of ownership can be considered a governance mechanism (Nguyen et al., 2015) Therefore, this study proposes the following hypothesis:

H1: There is a negative relationship between ownership concentration and accounting conservatism 2.2.1.2 The relationship between managerial ownership and accounting conservatism

According to Jensen (1993), managers have a strong incentive to perform if they have a substantial equity stake in the firm (known as the alignment effect) However, Morck et al (1988), Jiang and Kim (2000) claimed that a high level of manager ownership (concentration) will lead to poorer performance and poor reporting quality respectively due to the influence of insiders (known as the manipulative effect) Lafond and Roychowdhury (2008) provided evidence that there is a negative impact of managerial ownership on accounting conservatism Mohammed et al (2017) argues that more managerial ownership, lower the demand for conservatism In Vietnam, the characteristic of the ownership model is a large percentage of shares that are owned by the board of directors, a large percentage of internal shareholders, leading to a high possibility of non-transparent information (Vo et al., 2020) Therefore, this study proposes the following hypothesis: H2: There is a negative relationship between managerial ownership and accounting conservatism

2.2.1.3 The relationship between institutional ownership and accounting conservatism

Institutional investment is one of effective elements which joining the control system as external control

in corporate governance Institutions are a group of investors, having directly or indirectly influence in the operations of a company's management (Gillan and Starks, 2003) Through the supervision of institutional investors, the behavior of managers can limit (Gillan and Starks, 2003) From mitigating the problem related

to asymmetric information, Jiang and Kim (2000) finding that institutional ownership increases the level of accounting conservatism and reduces information asymmetry in terms of market In addition, they can influence the choosing of accounting procedures and lead to impact on the financial reporting, finally, increasing the financial reporting quality by controlling management's behavior (Song, 2015) Some studies provide that institutional ownership has a positively related to accounting conservatism such as Ramalingegowda and Yu (2012), Alkurdi et al (2017) Vietnam is a frontier equity market that having typical characteristic with weak investor protection (Tran and Le, 2020) Therefore, this study proposes the following hypothesis:

H3: There is a positive relationship between institutional ownership and accounting conservatism

2.2.1.4 The relationship between foreign ownership and accounting conservatism

Large external block holders can effectively monitor management by using sufficient voting control, thus minimizing agency problems (Shleifer and Vishny, 1986) Since external monitoring by foreign ownership is intense and effective, the discretionary choices' opportunities in publishing accounting information become more constrict And for protecting their wealth and to cut down monitoring costs, foreign shareholders have substantial incentives and expertise to independently controlling firms Thus, higher ratio of foreign ownership generates firms to improve transparency and to reduce opportunities of managerial accounting choices and decisions An (2015) provides empirical evidence that foreign ownership is positively related to conservatism

in Korean context Liu (2019) also found that foreign ownership is positively associated with accrual conservatism with the sample of Jordan For listed companies in Vietnam, the research results of Vo (2017) suggest that foreign ownership have an incentive to be more cautious in their financial management Therefore, this study proposes the following hypothesis:

H4: There is a positive relationship between foreign ownership and accounting conservatism

2.2.1.5 The relationship between state ownership and accounting conservatism

Based on political cost theory, the thesis expects that higher state ownership, the better the quality of specific financial statements, particularly, it means the higher degree of accounting conservatism in the presentation of financial statements Cullinan et al (2012) point out that state ownership has a positive effect

on the level of accounting conservatism in Malaysia context Furthermore, Bushman and Piotroski (2006) used country-level data to conduct their research, and they found that the relationship between state ownership and accounting conservatism depends on the legal system Specifically, they find that state ownership is associated with lower conservatism in common-law countries (such as the United States) and higher degrees of conservatism in civil law countries (such as China) Vietnam is a country in the direction of civil law country, the characteristics of joint stock companies listed on the Vietnam stock market are derived from the equalization of state-owned enterprises (Le et al., 2021) Therefore, based on the above arguments, the hypothesis is stated as follows:

H5: There is a positive relationship between state ownership and accounting conservatism

2.2.1.6 The relationship between accounting conservatism and firm performance

Bushman and Smith (2001) argue that accounting information plays an important role in monitoring senior managers in the company, it contributes in making moral hazard problems better, and decreases the problems generated by information asymmetries (Lara et al., 2009), and it facilitates the estimation of firms’ future cash flows (Lambert et al., 2007) Bushman and Smith (2001) and Lambert et al (2007) suggest that these effects are expected to increase firm performance by improving firm’s investment decisions Affes and Sardouk (2016) concluded that the application of conservatism in accounting has a positive effect on firm performance LaFond and Watts (2008) argue that the application of conservative principles in financial statements can reduce the ability of managers to manipulate financial statements and reduce agency costs In addition, Zulfikara et al (2020) find that the application of accounting conservatism will reduce agency costs and improve the quality of financial statement information so that it will improve firm performance Callen et al (2016) provide evidence that in a highly asymmetric information regime, highly conservative borrowers (Companies) typically incur lower interest rate differentials than less conservative borrowers Study of Dinh

et al (2022) also examine the association between financial reporting quality and investment efficiency with

a sample of listed firms in Vietnam, they find that financial reporting quality is positively associated with investment efficiency Therefore, the hypothesis can be formed as:

H6: There is a positive relationship between accounting conservatism and firm performance

2.2.1.7 Other factors that do not belong to the ownership structure affect the level of accounting conservatism Firm size (FSIZE), Leverage (LEV), Sales growth (GROWS), Profitability (ROA), Market-to-book (MTB)