Corporate tax, earnings management, corporate social responsibility disclosure and corporate performance: Moderating role of corporate governance - evidence from Vietnam

Abstract

The study analyzes 3 groups of relationships, including: The first relationship group is the effects of corporate tax factors (CT) (including (tax planning (TP), corporate tax expense (CTE), deferred tax expense (DTE), deferred tax asset (DTA), deferred tax liability (DTL)), corporate governance factors (CG) (board characteristics: board independence (BI), board size (BS), board age (BA), board meeting (BM), and board women (BW)), and corporate social responsibility disclosure (CSRD) on earnings management (EM). The second relationship group is the effects of EM and CSRD on corporate performance (CP). The third and last relationship group is the effects of EM and CSRD on corporate performance (CP) with the moderating role of corporate governance factors (CG) in the corporates on the Vietnamese stock market (HOSE and HNX). The author uses balance sheet data gained from financial statements and annual reports of 267 corporates on the Vietnamese stock market (HOSE and HNX) in 3 years 2019 - 2021, a total of 801 observations. The author has performed tests to select the most suitable model among 3 models of Pooled OLS, FEM and REM. Because the model has heteroskedasticity and auto-correlation, the author used FGLS to overcome these phenomena. The research results show that TP and CTE positively impact EM. In contrast, DTA negatively affects EM. However, DTE and DTL do not impact EM. Board independence (BI) positively impacts EM, whereas board size (BS) and women on the board (BW) negatively affect EM. Correspondingly, BW negatively impacts EM. However, average age of board members (BA) and board meeting (BM) do not affect EM. CSRD does not affect EM. Besides, EM and CSRD positively impacts corporate performance (CP) (measured in both ways ROA & Tobin's Q (TBQ)). In addition, board independence (BI), board meeting (BM) and women on the board (BW) have a role of weakening the influence of EM on CP (measured by ROA). However, the rest of corporate governance (CG) factors such as BS and BA have no role in moderating the influence of EM on CP (measured by ROA). BS, BA and BW have a role in moderating the relationship between CSRD-CP (measured ROA). Specifically, BS and BA enhance the influence of CSRD on CP (measured by ROA). In contrast, BW weakens the influence of CSRD on CP (measured by ROA). The rest of CG factors such as BI and BM have no role in moderating the influence of CSRD on CP (measured by ROA). In addition, BI and BS moderate the relationship between EM-CP (measured by TBQ). Specifically, BS enhances the influence of EM on CP (measured by TBQ), while BI weakens this influence. The rest of corporate governance (CG) factors such as BA, BM and BW have no role in moderating the influence of EM on CP (measured by TBQ). Specifically, all 5 factors of corporate governance (CG) do not moderate the influence of CSRD on CP (measured by TBQ). Based on these study results, the author suggested some theoretical and practical implications, proposed recommendations for a number of relevant subjects such as researchers, managers of corporates on the Vietnamese stock market (HOSE and HNX), state management agencies, investors, and other related entities.