Factors affecting the quality of accounting information on the financial statements of listed construction enterprises on the vietnamese stock exchange

method makes it easy to collect information from financial statements and annual reports in listed companies; however, it has its shortcomings: it focuses on surveying the viewpoints of users of financial statements, making it difficult to determine the exact value of the enterprise Measurement through the stock market's reaction to changes in the financial statements. This measurement is done through the changes of data on the financial statements, determination of loss when re-creating the financial statements, the risk of information disclosure ... There are studies by Beretta and Bozzlan (2006), Roudakin (2011), Hirschey et al (2012), Dang Thi Thuy Hang (2016) ... Measurement according to this viewpoint surveys financial report makers in listed enterprises, and mention information on notes to financial statements or non-financial information. However, the characteristics of accounting information and the overall picture of the quality of accounting information in financial statements have not been fully described. 2.1.2. Direct measurement of the quality of accounting information on financial statement 6 Based on the description of information characteristics to assess the quality of accounting information, it is possible to measure according to individual characteristics or to measure all characteristics of accounting information on the financial statements. Viewpoints about the characteristics of accounting information on the financial statements are regulated by professional accounting firms (IFRS Framework, FASB, AASB, VAS ...). There are studies of WinKler (2000), Houssain (2008), Nguyen Thi Phuong Hong and Duong Thi Khanh Linh (2014), Beest et al (2009).This viewpoint of measurement allows a more direct and comprehensive assessment of accounting information on the financial statements from the perspective of the financial report issuer. 2.1.3. Selection of the viewpoint to measure the quality of accounting information on financial statements The chosen viewpoint in the thesis is direct measurement of the quality of accounting information on the financial statements (according to characteristics of accounting information) because: Ultimately, quality must be assessed based on its responsiveness to users of information, so the accounting information is valuable when its characteristics are fully assured. In addition, the direct measurement viewpoint allows the determination and measurement of accounting information in the most complete and convincing way, providing comprehensive and multidimensional information to determine the level of impact of accounting information on the activities of enterprises. 2.1.4. Overview of measuring the quality of accounting information by characteristics In this content, the thesis focuses on overview of the characteristics of accounting information described by major professional firms (the International Accounting Standards Council - FASB and International Accounting Standards Board - IASB); The convergence of opinion between these two firms occurred when issuing the International Accounting Standards. The measurement viewpoint of several countries (Australia, China, France and in Vietnam) and the characteristics of accounting information on the financial statements are 7 described quite diversely (completeness, faithful representation, transparency, understandability and timeliness). In addition, an overview of characteristics of accounting information on the financial statements is described in a number of studies applying the views of the IASB that good-quality accounting information means “providing useful financial information for users" and in achieving usefulness, the fundamental and enhancing characteristics are two representative characteristics of the quality of accounting information on the financial statements. In addition, in a number of studies applying the views of the IASB about the characteristics of accounting information on the financial statements, it is shown that good-quality accounting information means “providing useful financial information for users"; to achieve that usefulness, the fundamental and enhancing qualitative characteristics are two representative characteristics for the quality of accounting information on the financial statements. 2.2. Overview of studies on factors affecting the quality of accounting information on financial statements 2.2.1. Overview of research viewpoint on factors affecting the quality of accounting information on financial statements The presented viewpoints on factors affecting the quality of accounting information are: viewpoint that highly regards the relevance of information to users, viewpoint that highly regards the information creation process and viewpoint on Total Quality Management (TQM). Based the analysis of each research viewpoint’s pros and cons, in this thesis, the TQM viewpoint is selected in to study factors affecting the quality of accounting information on the financial statements and approach factors with comprehensive and systematic impact on the internal characteristics of enterprises and the external impacts on the quality of accounting information on the financial statements. 2.2.2. Overview of empirical studies on factors affecting the quality of accounting information on financial statements Regarding studies related to the thesis topic in Vietnam and in the world during the period of 1995-2018, two basic groups of factors can be generalized: the 8 group of internal factors (including factors of governance, human being, information technology application, operational capacity, internal control mechanisms, characteristic of listing, training activities, corporate culture ...) and the group of external factors (political environment, legal environment, listing on many stock exchanges ...). In addition, the overview shows that studies on this topic produce quite diverse results; with different research areas and angles, there may be similar results, but there are also results that negate each other. 2.3. Research gap From the literature review process, the author found that there exist the following gaps in previous studies in the world and in Vietnam: Firstly: The viewpoints to measure the quality of accounting information on the financial statements in previous studies have only focused on the indirect measurement method. In spite of some studies on this topic according to the direct method, up to now, there are very few comprehensive studies on fundamental and enhancing qualitative characteristics) from the point of view of measurement of the IASB 2018. Secondly: In the overview of factors affecting the quality of accounting information on the financial statements from domestic and foreign studies, it is shown that these factors are quite diverse. Currently, studies have not been conducted to identify and measure the impact level of factors on the quality of accounting information on the financial statements in listed construction companies. In addition, there is no study mentioning the impact of distinctive operational characteristic of the construction industry on the process of supplying and presenting accounting information on the financial statements. Thirdly: Empirical studies mainly apply descriptive statistics and SPSS software. No study has conducted verification of the linear structural model to measure factors affecting the quality of accounting information on the financial statements in this field. Therefore, verifying the impact and impact level of factors on the quality of accounting information on the financial statements of listed enterprises is a gap that requires further studies. 9 CHAPTER 3: THEORETICAL BASIS AND RESEARCH MODEL 3.1. Theory of the quality of accounting information on financial statements 3.1.1. Concept of accounting information According to Accounting Law No. 88/2015/QH13, accounting information on the financial statements “is information about the business and production process of the enterprise that reflects the financial situation, results and operation of the enterprise, are expressed in the form of value, material and labor, is obtained from the accounting system, and is shown on the financial statements to meet the needs of related subjects”. 3.1.2. Concept of quality of accounting information on financial statements Based on the International Accounting Standard 1 (IAS 01), the thesis builds the concept of quality of accounting information on financial statements as “providing useful financial information about enterprises for current, potential investments, lenders and other creditors in making decision.” 3.1.3. Characteristics of accounting information described from the viewpoint of international accounting standards Characteristics specified in the IAS 01 — Presentation of Financial Statements include fundamental and enhancing characteristics. Fundamental characteristics include: relevance and truthful presentation Relevance: It is understood as information that helps users to easily adjust their decisions to suit the circumstances. To determine the value of accounting information to decisions of users, accounting information must ensure predictive value and confirmatory value. Regarding predictive value, user uses the input information to predict future results. Regarding confirmatory value, information provided will confirm events that have occurred or revise previous plans. Truthful presentation: Information shown on financial statements about economic operations is understood to be complete, neutral, and free from error with no additions, omissions or adjustment. Specifically: Completeness: Information must fully reflect the nature of the economic phenomenon to be depicted. 10 Neutrality: Information must be depicted without bias or manipulation to achieve the desired personal outcome or influence the decision of users into a particular direction. No errors: There is no material misstatement in the information presented. Free from error: Information must be depicted without substantial inaccuracies. Enhancing characteristics include: Comparability: This is the requirement to quantify information according to a unified criterion to help users realize the similarities and differences between economic phenomena. Therefore, when measuring and recording, accountants must be consistent in use accounting methods and procedures over the accounting periods without changing arbitrarily. Verifiability: The connotation of this characteristics means when information is presented in a truthful manner, it must be supported by evidence rather than without any basis. Understandability: Information must be provided in time to be useful for users before it is no longer capable of influencing their decisions. Understandability: accounting information must be presented clearly and concisely, avoid being lengthy and using polymorphic words that make it Limitations of information quality Materiality: This refers to the impact level of omission or misstatement of financial information when presenting information that is significant enough to impact the decisions that users make. This characteristic is considered to be a limitation because it affects all characteristics of information quality. Costs: The benefits of financial statements are expressed in qualitative and quantitative aspects, which must be proven for the costs incurred when preparing and presenting the accounting statements. 3.2. Fundamental theory for identifying factors 3.2.1 Agency Theory Representative theory refers to the gap of interests between principals and their agents that gives rise to negative behaviours; in addition, it also mentions 11 external monitoring mechanisms to reduce such behaviours. In applying this theory, the author builds groups of factors that can affect the quality of accounting information on financial statements, including: Profit management behaviour, independent audit, the role of internal control. 3.2.2. Resource dependency theory This theory determines the contribution of managers and employees in enterprises in the process of bridging the gap with the surrounding environment. This theory raises expectations that the factors of the role of managers and competency of accounting staff affect the quality of accounting information on financial statements. 3.2.3. Information processing theory This theory refers to the ability to regulate within the organizational structure, the ability to increase information processing capacity to minimize environmental risks. This theory is applied to propose the relationship of how the role of information technology application, training and enhancement of accounting staff affects the quality of accounting information on financial statements. 3.2.4. Institutional theory This theory specifies that the change of the legal environment will create pressure leading to changes in management and even in the operational scale of the operations, which more or less affects effect accounting. This theory is applied to explain the impact of the legal environment on the quality of accounting information on financial statements. 3.3. Distinctive operational characteristics of construction enterprises on the Vietnamese stock exchange In this section, the author analyzes the basic distinctive characteristics of listed construction enterprises that affect the process of acquiring and providing accounting information on financial statements. The basic distinctive characteristics to be analyzed here are: product, production process, consumption and capital structure. 12 3.4. Research model and hypotheses 3.4.1. Proposed research model Figure 3.1. Proposed research model 3.4.2. Research hypotheses The author's research hypotheses are summarized in the following table: Table 3.1: Synthesis of research hypotheses and theoretical basis Hypothesis Content Theoretical basis H1 The role of managers has a positive impact on the quality of accounting information on the financial statement Agency theory Resource dependency theory H2 Profit management behaviour has a negative impact on of accounting Agency theory Role of managers Earning management behaviour Training activities Accounting software Internal control Competency of accountants Independent audit organization Distinctive operational characteristics of the construction industry Legal environment Accounting information quality Fundamental characteristic Enhancing characteristic 13 information on the financial statement H3 Skill training and enhancement for accounting staff has positive impact on the quality of accounting information on the financial statement Agency theory Information processing theory H4 The accounting software has positive impact on the quality of accounting information on the financial statement Information processing theory H5 The internal control system has positive impact on the quality of accounting information on the financial statement Agency theory Information processing theory H6 The competency of the accounting staff has positive impact on the quality of accounting information on the financial statement Information processing theory Resource dependency theory H7 The role of independent auditing firms has positive impact on the quality of accounting information on the financial statement Information processing theory H8 Distinctive characteristics of the construction industry has negative impact on the quality of accounting information on the financial statement H9 The legal environment has positive impact on the quality of accounting information Institutional theory 14 CHAPTER 4: RESEARCH METHODOLOGY 4.1. Building the research process To verify the research models and hypotheses, the author uses a combination of qualitative and quantitative research methods. 4.2. Performing qualitative research In qualitative research, the author conducts discussions with experts. The goal of this method is to determine the suitability of factors in the research model. To implement this method, the author design the questionnaire with 3 parts: (1) Discussing about the factor of "quality of accounting information on financial statements" and the impact level of 9 factors in the research model on the quality of accounting information on financial statements of listed companies in the Vietnamese stock exchange. (2) Discussing hypotheses of relationships in the proposed research model. (3) Discussing measurement scales of factors in the proposed research model. 12 participants are selected for the discussion who satisfy one of the following criteria: Having knowledge and experience in financial accounting, having a direct or indirect role in accounting in listed construction enterprises. Specifically, they include: lecturers in accounting, representatives of accounting management, supervision, auditing departments, auditors of independent auditing firms participated in auditing at listed construction enterprises, accountants, chief accountants, managers, representatives of Supervisory Board in listed construction enterprises. 4.3. Performing quantitative research 4.3.1. Data collection tools To build information for the expected questionnaire, the author uses the 5- point Likert scale in the survey tool. 4.3.2. Design of study sample and data collection 15 In this content, the author determines the minimum sample size in the study is 250. To compensate for a percentage of information to be removed, the author decides to interview 720 subjects. Structure of research sample: The author surveyed 60 listed construction enterprises on HNX and HOSE (23 enterprises on HOSE, and 37 enterprises on HNX, accounting for 37.7% and 62.3%, respectively) . Surveyed subjects: accountants, chief accountants, representatives of the Supervisory Board, managers. In each construction enterprises, the author interviews 12 staff members, specifically as follows: 4 managers, 2 officers of the Supervisory Board, 5 accountants, and 1 chief accountant. Sampling method: The author uses the convenient non-random sampling method. Method of data collection: Data are collected by direct interviewing techniques and via email. The results of the interview, after selection (removing questionnaires with many missing information cells, or having more than one answer in a box, or being identified as unreliable with proofs) are entered into the data matrix on the SPSS 20.0 and AMOS 20.0 software. 4.3.3. Analytical method Based on the received questionnaires that are eligible, the author encodes collected data, applies the descriptive statistics of the sample, and processes with SPSS and AMOS software to perform descriptive statistics, verification of the measurement scale's reliability, Exploratory Factor Analysis (EFA), Confirmatory Factor Analysis (CFA) and verification of the structural model. 16 CHAPTER 5: RESEARCH RESULTS 5.1. Overview of listed construction companies on the Vietnamese stock exchange The thesis has outlined the establishment characteristics of the Vietnamese stock exchange, the role and the data showing the development speed of the construction industry in Vietnam. At the same time, the thesis analyzes the industry factor and distinctive characteristics of construction activities. 5.2. Descriptive statistics of research sample The study presented the descriptive statistic results of research sample in terms of listing time, firm size, listed exchange, independent auditing firms and job position. 5.3. Analysis of factors affecting the quality of accounting information on financial statements of listed construction companies on the Vietnamese stock exchange 5.3.1. Analysis of the measurement scale's reliability Upon completing the analysis of the measurement scale's reliability, the author removes 6 scales; there are 46 scales left representing 9 independent variables and 1 dependent variable. These scales are included in EFA analysis. 5.3.2. EFA analysis After removing the variable MTPL1 (load factor <0.5), EFA analysis is performed for the second time with KMO test results according to Table 5.5: Table 5.5. Results of KMO test * EFA is done using Promax rotation KMO and Bartlett’s Test KMO value 0.844 Bartlett’s Test of Sphericity Approx, Chi-Square 11032.091 Df 990 Sig, 0.000 17 - The results shows that after eliminating the scales that do not satisfy reliability, remaining scales are placed into 11 groups explaining 59.467% of the variation of the data. - For the results of EFA analysis above, the total variance extracted is 59.467%, greater than 50% and the eigenvalues values of the factors are all greater than 1; therefore, it is appropriate to use the EFA method. 5.3.3. CFA analysis * Testing the suitability of the model shows the indexes CMIN / DF = 1.885 ( 0.9; GFI ≈ 0.9; RMSEA = 0.043 (<0.08) are compatible between the model and research data. * Composite Reliability (CR) and Average Variance Extracted (AVE): The groups of factors in the research model all have (CR)> 0.5 and AVE are> 0.5; therefore, the scales of the observed variables are satisfactory. * Convergence test: Analytical results show all non-standardized and standardized coefficients are greater than 0.5 and AVE values are greater than or equal to 0.5; so it can be concluded that all factors achieve convergent values. * Unidimensionality: From the obtained results, the model achieves Unidimensionality. Hence, from all the above results, it can be confirmed that the concepts or measurement scales achieve discriminant validity. 5.3.4. Analysis of the linear structural model Table 5.13. Analysis results of the SEM linear structural model Correlation relationship among factors Estimate S.E. C.R. P Normalized coefficient CLaccounting <-- KSNB 0.145 0.051 2.808 0.005 0.236 CLaccounting <-- NVKT 0.241 0.048 5.079 *** 0.434 CLaccounting <-- DTXL -0.206 0.061 -3.384 *** -0.247 CLaccounting <-- KTV 0.175 0.054 3.264 0.001 0.232 CLaccounting <-- HVQT -0.214 0.037 -5.847 *** -0.375 CLaccounting <-- MTPL 0.090 0.037 2.428 0.015 0.163 CLaccountin <-- HDDT 0.078 0.043 1.798 0.072 0.137 CLaccountin <-- PMK 0.058 0.033 1.757 0.079 0.110 CLaccounting <-- VTQT 0.200 0.046 4.367 *** 0.328 18 CB <-- CLacc 1,000 0.569 BS <-- CLacc 0.957 ,112 8,580 *** 0.627 Results of the linear structural model analysis shows factors affecting the quality of accounting information on financial statements of listed construction enterprises on the Vietnamese stock exchange have a significant level of 5%, including: KSNB, NVKT , DTXL, KTV, HVQT, MTPL, VTQT. The factors that are not statistically significant include: HDDT, PMKT. Specifically: Factors that have positive impact on the quality of accounting information of construction enterprises listed on the Vietnamese stock exchange in ascending order are MTPL, KTV, KSNB, KTV, VTQT and NVKT with non-standardized coefficients of 0.09, 0.175, 0.145, 0.200, and 0.241, respectively, and estimated standardized coefficients of 0.163, 0.232, 0.236, 0.328, 0.434, respectively, at 5% significance level. These results support the hypothesis H9; H7; H5; H1; H6. Factors that have negative impact on the quality of accounting information of construction enterprises listed on the Vietnamese stock exchange include DTXL (β = -0.206) supporting hypothesis 8.1 and HVQT (β = - 0.214) with non-standardized beta coefficient of -0.247, -0.357 which supports hypothesis 2.1. The research results from Table 5.13 show that the "enhancement" characteristics have has greater meaning and role than fundamental characteristics in creating good-quality accounting information on financial statements of listed construction enterprises on the Vietnamese stock exchange with 5.3.5. Testing the difference in the quality of accounting information on the financial statements of listed construction companies * Listed exchange: sig value (listed exchange) = 0.199 (> 0.05), meaning there is no statistically significant difference in the quality of accounting information among listed construction enterprises on HNX and HOSE. * Auditing firm: sig value