Research Hypothesis Regarding the Impact of Ownership Structure on the Quality of Accounting Information

Thus, although the research results on the impact of corporate governance on accounting information quality in each country are different, even in opposite directions, scientists agree that corporate governance is a solution to improve accounting information quality. Corporate governance helps promote the monitoring function of shareholders on the operations of managers, thereby minimizing the consequences of the agency problem and overcoming the phenomenon of information asymmetry. Under the close supervision of the management system, accounting information will have better quality, which is the basis for decision-making by information users. In studies, the impact of corporate governance on accounting information quality is not uniform due to the influence of the legal environment and changes over time. Therefore, with the specific political and economic conditions in Vietnam, research on the establishment of the Board of Directors, the Supervisory Board and the design of ownership structure to optimize the functions of the Board of Directors and the Supervisory Board, and increase accounting information quality is a necessary research with consideration of appropriate factors.

2.4. Research model

Based on the study and inheritance of studies on accounting information quality, corporate governance and specific analysis of corporate governance factors affecting accounting information quality, combined with the characteristics of Vietnam, the author proceeds to build a research model suitable for the research objectives. In this research model, the author measures accounting information quality in terms of honesty based on the framework of IASB and FASB, in accordance with Vietnamese accounting standards (2003). The dependent variable accounting information quality is measured according to two measures: earnings management and errors in financial statements. Independent variables are factors belonging to corporate governance including variables on ownership structure such as state ownership, ownership of institutional shareholders, ownership of the Board of Directors; characteristics of the Board of Directors such as size of the Board of Directors, concurrent holding of the positions of Chairman of the Board of Directors and CEO, ratio of independent members, seniority, expertise in finance, accounting, gender of the Board of Directors; and characteristics of the BKS include the number, seniority, expertise in finance, accounting and gender of BKS members. From there, the thesis examines the impact of the above mentioned factors of corporate governance on accounting information quality.

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State ownership

Organizational ownership

Ownership of Board of Directors Size

Independence Concurrent tenure Seniority Expertise

Sex

QUALITY OF INFORMATION

ACCOUNTANT

Scale

Seniority

Expertise

Sex

CHARACTERISTICS OF THE BOARD OF DIRECTORS

OWNERSHIP STRUCTURE

Figure 2.3. Research model

CHARACTERISTICS OF THE BOARD OF SUPERVISION

Source: Author's synthesis

Thus, based on the theoretical framework of research on accounting information quality, corporate governance and the impact of corporate governance on accounting information quality, the thesis has synthesized and proposed a research model. The model is the premise for answering research questions, combined with the application of research methods to give the final research results of the thesis.

CHAPTER 3 RESEARCH METHODOLOGY

3.1. Research design

The research design of the Thesis is described in diagram 3.1:

Ordinary least squares (OLS) method, fixing industry and year effects

Binary logistic regression method,

fixed industry and year effects

Figure 3.1. Research design of the Thesis

Overview of research on accounting quality and the impact of corporate governance on accounting quality

Theoretical framework of the study

Model building and research methods

The impact of corporate governance on accounting information quality measured by earnings management

Impact of QTCT on accounting quality measured by errors in financial statements

- Current status of accounting information systems of listed companies

- The impact of ownership structure on accounting information system

- The impact of board of directors' characteristics on accounting information quality

- The impact of BKS characteristics on accounting quality

Solutions to improve corporate governance to improve accounting information quality at companies listed on the Vietnamese stock market

Source: Author's construction

In order to achieve the set objectives and answer the research questions, the research was conducted through three steps: (1) Building a theoretical framework, (2) Building a model and research methods, and (3) Analyzing research results and providing solutions.

Step 1: Build a theoretical framework

The thesis builds a theoretical framework from an overview of domestic and foreign research on accounting information quality and the impact of corporate governance on accounting information quality. Inheriting previous studies, the author has chosen the research direction on accounting information quality in terms of honesty, which is a basic characteristic stipulated in Vietnamese Accounting Standards. From there, the author builds a theoretical framework on the impact of corporate governance on accounting information quality.

Step 2: Build a model and research method

Based on the theoretical framework established in step 1, the author determined the research objectives, research questions, built the model, proposed research hypotheses and selected appropriate research methods. The author collected financial data provided by Stoxplus Joint Stock Company, management data provided by Tai Viet Joint Stock Company (Vietstock), combined with data collection on the professional qualifications of the Board of Directors and the Board of Supervisors from the annual reports of listed companies. Quantitative methods, specifically the OLS least squares regression method and the binary logistic regression method fixed on industry and year effects, were the two methods selected respectively for the two models testing the impact of corporate governance on accounting information quality measured by earnings management on the basis of accruals and errors on financial statements.

Step 3: Analyze research results and propose solutions

Using the research model and research method in step 2, the thesis analyzes and discusses the final research results including the current status of accounting information quality of listed companies on the Vietnamese stock market and performs regression, thereby providing empirical evidence on the impact of corporate governance on accounting information quality in terms of ownership structure, characteristics of the Board of Directors and characteristics of the Supervisory Board. The research results are the basis for solutions related to corporate governance to improve accounting information quality of listed companies in Vietnam.

3.2. Research hypotheses

3.2.1. Research hypothesis related to the impact of ownership structure on the quality of accounting information

State ownership (SH_NHANUOC)

The theoretical basis shows that studies on the impact of State ownership on accounting information quality provide contradictory conclusions due to the influence of the political economic characteristics of each country and the timing of the research. Accordingly, State ownership can limit or increase loopholes for opportunistic behavior of the Board of Directors, reflected in the adjustment of accounting information. Based on the characteristics of the Vietnamese economy, companies receiving State capital have the advantage of State protection in credit and business policies. Along with that, business performance is not considered a top priority, instead, these companies can be maintained to serve other purposes, such as social welfare, national security, and political purposes. With the advantage of concentrated State ownership, the profit pressure from minority shareholders is insignificant, the Board of Directors of State-owned enterprises do not have to bear the pressure of beautifying the financial statements to hide the problems of the enterprise, to satisfy shareholders, so the accounting information quality provided by State-owned companies is considered honest and reliable. By this explanation, the thesis supports the views of Wang and Yung (2011), Kao (2014), Nguyen Thu Hang et al. (2018) and proposes the research hypothesis H1:

Hypothesis H1: The larger the state-owned enterprise, the more accounting information quality.

High.

Institutional shareholder ownership (SH_TOCHUC)

Institutional shareholders are considered to have professional advantages and sufficient capacity.

detect accounting information manipulation behaviors as well as have more information channels and more material resources to monitor managers (Elsbach and Bhattacharya, 2001). Owning a large enough number of shares creates conditions for these organizations to participate in the monitoring system, as well as increases the motivation for these institutional investors to closely monitor the activities of the Board of Directors, to ensure that the company receiving capital will provide quality accounting information. With

Based on the above arguments, similar to Cornett et al. (2008), Firmansyah et al. (2019), the author proposes hypothesis H2:

Hypothesis H2: The larger the institutional ownership of a company, the higher the accounting transparency.

Ownership of Board of Directors (SH_BGD)

Jensen and Meckling (1976) argued that one of the ways to limit agency costs is to increase the ownership ratio of the Board of Directors, then it seems that the Board of Directors will run their own business, the interests of the Board of Directors will be linked to the interests of the business. On the other hand, the pressure of being fired will be reduced if the Board of Directors owns a large enough number of shares. Therefore, the Board of Directors will not be under pressure to distort accounting information to beautify the financial statements and appease shareholders. Similar to the research of Loebbecke (1989), Kao (2014), the author proposed hypothesis H3:

Hypothesis H3: The larger the company's Board of Directors' ownership, the higher the accounting information quality.

3.2.2. Research hypothesis related to the impact of Board of Directors characteristics on the quality of accounting information

Board of Directors size (QUYMO_HDQT)

Research by Xie et al. (2003) and Fathi (2013) suggests that a large-scale board of directors will effectively promote the monitoring function with comprehensive control, gathering many opinions and experiences of experts, thereby limiting the behavior of the board of directors adjusting accounting information, improving accounting information quality. Agreeing with this point of view, the author proposes hypothesis H4 for the research model:

Hypothesis H4: The larger the company's Board of Directors, the higher the accounting information quality.

Independence (DOCLAP_HDQT)

Most studies believe that independent members play an important role in ensuring the monitoring function of the Board of Directors. Independent members are highly appreciated for their objectivity, so in the process of checking and evaluating the performance of the operator, they maintain a neutral position and are not bound by the relationship with the Board of Directors. From there, the studies of Holtz et al. (2014), Roden et al.

(2016) provided evidence of a positive relationship between board independence and accounting information quality. Based on this argument, the author proposes hypothesis H5:

Hypothesis H5: The more independent the board of directors of a company is, the higher the accounting information quality is.

Concurrent (KIEMNHIEM_HDQT)

Research by Loebbecke (1989), Roden et al. (2016) suggests that companies with a Chairman of the Board of Directors who also serves as CEO will have low accounting information quality because the problem of holding these two positions concurrently leads to an individual holding both the supervisory function and the executive function, thus weakening the role of the Board of Directors. This centralization problem raises concerns about the abuse of power for personal gain and concealment of information through adjusting entries of the concurrent individual. Based on this explanation, the author proposes hypothesis H6:

Hypothesis H6: The company does not have the status of Chairman of the Board of Directors concurrently as CEO, the higher the accounting information quality.

Board of Directors Seniority (THAMNIEN_HDQT)

Research by Ghosh et al. (2010), Kim and Yang (2014) shows that seniority of the Board of Directors means long-term commitment to the company, which will help these members have understanding and familiarity with the business operations as well as the accounting information system of the company, thereby helping the company's monitoring system operate more effectively. Therefore, seniority of the Board of Directors is expected to help improve accounting information quality. Supporting this view, the author proposes hypothesis H7:

Hypothesis H7: The company with the more seniority of the Board of Directors members has the higher accounting information quality.

Professional qualifications of the Board of Directors (CHUYENMON_HDQT)

Studies by Qinghua et al. (2007), Skousen and Wright (2008) all highly appreciate the positive impact of the Board of Directors having financial and accounting expertise on accounting information quality. With their understanding of accounting and finance, these members are expected to detect the accounting information adjustment behaviors of the operator, thereby helping to improve accounting information quality. With this argument, the author proposes hypothesis H8:

Hypothesis H8: The higher the percentage of board members with expertise in finance and accounting, the higher the accounting information quality.

Gender of Board of Directors (GIOITINH_HDQT)

Studies on the impact of gender on accounting information quality have shown that female participation in the board of directors has a positive impact on accounting information quality (Thiruvadi and Huang, 2011). Female board members are often highly regarded in their supervisory role. This is explained by gender characteristics, as women tend to avoid risks, and accounting information distortion is considered a risk of the supervisory system. On the other hand, with the characteristics influenced by conservatism and moral reasoning, female participation in the board of directors is expected to enhance the effectiveness of the board of directors' supervisory role, thereby helping to enhance accounting information quality. Therefore, the author proposes hypothesis H9:

Hypothesis H9: The higher the ratio of female members in the board of directors, the higher the accounting information quality.

3.2.3. Research hypothesis related to the impact of Board of Supervisors characteristics on the quality of accounting information

Board of Supervisors (QUYMO_BKS)

According to Firth et al. (2007), the number of BKS members is positively related to accounting information quality. An agency with many members will be diverse in expertise and experience, thus achieving effective supervision and improving accounting information quality. From there, the author proposes hypothesis H10:

Hypothesis H10: The larger the company's BKS size, the higher the accounting information quality.

Seniority of Board of Supervisors (THAMNIEN_BKS)

Research by Chen et al. (2006) shows that seniority of the BKS will help them gain experience and familiarity with the company's internal control system, thereby helping the company's monitoring system operate more effectively. Therefore, seniority of the BKS is expected to help improve accounting information quality. From that, the author proposes hypothesis H11:

Hypothesis H11: The longer the company's Board of Supervisors is, the higher the accounting quality.

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