Factors affecting the financial reporting quality in commercial banks: Evidence in Vietnam

Abstract

The research aims to investigate the factors affecting the financial reporting quality (FRQ) of Vietnam’s commercial banks. These factors include board size, board independence, bank size, operating time, and the bank’s profit. The data for this study were collected from financial reports and annual reports of Vietnamese joint-stock commercial banks for the period 2019-2022. The author made a comparison of 3 models-Pooled Ordinary Least Square (Pooled OLS), Rem Effects Model (REM), and Fixed Effects Model (FEM) to select the best model. The results indicated that FEM was the most appropriate model. However, the model appeared heteroscedastic, so Feasible Generalized Least Squares (FGLS) was applied to test these hypotheses. FRQ was measured by qualitative characteristics approach, which was clarified by the International Financial Reporting Standard (IFRS) Framework. The research results found two factors significantly influencing the FRQ in Vietnam Joint Stock Commercial Banks. They were bank size and operating time. However, the remaining factors, such as board size, board independence, and bank's profit, did not affect the FRQ in Vietnam Joint Stock Commercial Banks. Our findings have some implications for relevant stakeholders, such as regulators, joint stock commercial banks, shareholders, etc., in making effective economic decisions.