Effect of Board of Directors on Financial Information Transparency in Vietnam: The Moderating Role of the Audit Committee

Abstract

Background: Some previous studies have recently demonstrated the relationship between corporate governance (CG) and financial information transparency (FIT). In Vietnam, FIT strongly influences frontier markets and investor behaviour. However, the board of directors (BOD) and Audit Committee (AC) structure is not strong in Vietnam, negatively influencing FIT and corporate operations.

Objective: This study examined the effect of the board of director representative components (BOD) on FIT in the Vietnamese frontier market and tested the moderating effect of AC on the relationship between BOD and FIT.

Methodology: The study uses a data sample of 233 listed non-financial companies from 2012 to 2023 with 2,796 observations using a multivariate regression model based on panel data technique. The feasible generalised least squares model was used to assess the impact of BOD with the moderating effect of AC on FIT for Earning Smoothing (ES), Earning Aggressive model (EA), and the logistic panel model for loss avoidance (LA).

Result: This evidence shows that BOD has a significant effect on FIT, and AC moderates this effect based on the Earning Smoothing (ES) model.

Conclusion: BOD influences positively FIT, and there is a moderating effect of AC on the effect of BOD on FIT in Vietnam.

Unique contributions: This study has contributed to understanding the significant positive influence of Vietnamese BOD-listed companies on FIT. It has also demonstrated the essential roles of AC in improving FIT and supporting BOD in controlling financial fraud and improving FIT.

Key recommendation: Future studies should expand on more research observations and BOD and AC to explore Vietnamese FIT and corporate governance more thoroughly.