Managerial Responses To Accounting Reform: Institutional Pressure And Accrual Reliability In An Emerging Market

Abstract

This study investigates how firms respond to accounting reform under different institutional pressures by examining the impact of Vietnam’s 2015 Accounting Law on accrual reliability across stock exchange environments. Extending prior International Financial Reporting Standards (IFRS)-focused literature, the study emphasizes the roles of domestic regulatory reform and institutional settings in shaping managerial reporting behavior in an emerging market. Using a balanced panel of 4,410 firm-year observations from non-financial firms listed on the Ho Chi Minh and Hanoi Stock Exchanges during 2010-2018, accrual reliability is estimated using a persistence-based earnings decomposition model and interaction regression analysis. The findings show that accrual reliability improves after the reform, particularly for working capital and financing accruals. However, the improvement is significantly weaker for firms listed on the Ho Chi Minh Stock Exchange, suggesting that stronger regulatory and market pressures may encourage more strategic reporting behavior. The study demonstrates that the effectiveness of accounting reform depends not only on regulatory change but also on institutional environments that influence managerial incentives. The findings provide implications for regulators in designing enforcement mechanisms and for managers in strengthening reporting practices to support Vietnam’s planned IFRS adoption