Summary of Doctoral thesis: That has resulted in an urgent need to handle with fraud financial statements of companies listed on Vietnam''s stock market

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CHAPTER 1
THE INTRODUCTION ABOUT RESEARCH
1.1. The need of research
Recently, fraudulent financial statements have been increasingly
becoming a serious problem for the government, listed companies and
investors, which threaten the fairness of financial market and enterprises. The
impact of the economic crisis in the world led to the financial exhaustion of
enterprises and rise in bankrupt and motivations for fraud behaviors towards
financial statements. That has resulted in an urgent need to handle with
fraud financial statements of companies listed on Vietnam's stock market.
Many researchers believe that statistics just pointed out economic
damages caused by fraudulent behaviors towards financial statements but not
measure intangible losses such as belief and negative impacts on the stock
market when not all of the financial statement frauds were
detected. According to ACFE (2014), only about 3% of the fraud financial
behaviors were detected in 2014 over the world. Besides, the audit reports
point out only whether there is any fraud but fail to give reasons of fraud
behaviors towards financial statements. Therefore, the study of key factors
resulting in fraud financial statements give contributions in improving the
efficiency of corporate governance and enacting feasible policies to control
frauds financial statements of companies listed in the stock market of
Vietnam effectively.
There have been many studies on fraudulent financial statements in
countries with developed economy as the US, UK, Australia where the
subjects using financial statements are well aware of the role of honesty and
accuracy of information provided in the financial statements. However,
according to in the author’s understanding, such studies are limited while the
topic is receiving a lot of attention from business managers, users of financial
statements, investors and management agencies. Furthermore, the limitations
of the accounting system itself in Vietnam and the specific characteristics of

financial statements, the activities of listed companies also are the sources of
fraud behaviors of financial statements. Thus, the thesis chooses the specific
context of the stock market in Vietnam to study the key factors affecting the

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fraud behaviors of financial statement are necessary.
1.2. Overview of relating studies
Research on factors resulting in frauds financial statements mainly done
by foreign researchers in many different stages of various the system
international auditing standards SAS (No. 16, No. 53, No. 82, No. 99) and
ISA No. 240. One noticeable difference is that there are studies being
conducted with a combination of influent factors while some other studies
just delve into a specific factor. Such studies based mainly on theoretical
fraud weight table with the warning signs of red (Red flags) initiated by
Romney et al (1980) and fraud triangle theory (fraud triangle) by Cressey
(1953).
In Vietnam, researches related to this topic has also been discussed but
mainly in terms of auditing statements and behaviors of adjusting profit while
factors affecting fraud behaviors of financial statements are ignored or not the
mail goals of research. Thus, studies of factors affecting frauds financial
statements have not yet systematized fully and not examined the impact of
these factors to fraud financial reports (Ngo Thi Thu Ha, 2007; Ha Hong
Hanh, 2012; Nguyen Thi Phuong, 2012).
Regarding model research, to detect fraud behaviors financial statements,
studies of DeAngelo (1986), Friedlan (1994), Healy (1985) and Jones (1991)
used the model accrual adjustments (Discretionary accruals models). Another
model also mentioned is the F-score model of Dechow et al (2011). This
model was also developed based on the M-score of Beneish, which
supplement non-financial variables and market data to external variables of
financial statements. In Vietnam, there are some studies using accrual models

such as Nguyen Thi Uyen Phuong (2014), Phan Thi Thuy Duong (2015). The
studies using typically statistical techniques include the research by Pham Thi
Bich Van (2013) and the study of Nguyen Tran Nguyen Tran, 2014 and
Hoang Khanh & Tran Thi Thu Hien, 2015 applying the model Beneish
anticipated misstatement of the financial statements (Appendix 2.2). The
limitation of these studies is the application of available models without any
modification to be match with Vietnam's stock market.


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1.2.2. The flaws of such researches
The limitation of relating researches as mentioned above prove the
necessity of this thesis which focus studying the topic in the context of stock
market of Vietnam with characteristics of an emerging stock market and in
the context that studies of frauds financial statements much less. The thesis is
expected to overcome the limitations of the theoretical basis, the choice of
variable sizes and methods of previous studies, especially previous studies on
this topic in Vietnam.

1.4. Subject and scope of the thesis
1.4.1. Subject of the thesis
Research object of the thesis is that the factors affecting fraudulent
financial statements at listed companies on the stock market Vietnam from
the perspective of independent audit companies legally approved.

1.3. Objectives and research questions
1.3.1. Research objectives

(1) To determine the content of appropriate theoretical foundation
applied in research, content, manner of fraudulent financial statements.
(2) To identify the reasons for fraudulent financial statements of the
listed companies matching context of the reality of Vietnam Stock Market.
(3) To analyze the impact of these reasons for frauds in the financial
statements company listed on Vietnam Stock Market based on actual survey
results.
(4) To give recommendations for the government, auditors to control,
detect and forecast fraudulent financial statements of listed companies on
Vietnam stock market.
1.3.2. Research questions
Question 1: What is the theoretical basis used as a foundation to study
reasons for fraudulent financial statements?
Question 2: What are kinds of reason for/ factors of fraudulent behavior
towards financial statements of the listed companies on the stock market in
Vietnam?
Question 3: How do these factors affect the motivation, pressure,
opportunities and attitudes to fraudulent financial statements at listed
companies on stock market in Vietnam nowadays?
Question 4: What are recommendations to maximally control fraudulent
financial statements of listed companies on Vietnam stock market?

1.4.2. Scope of research
The thesis focuses on studying factors affecting fraudulent financial
statements, which are based on the triangle of frauds in accordance with the
audit standards Vietnam No. 240 (VSA 240) and red signs red in the model
scales cheating on practical aspects of management. This study focus on
nonfinancial corporations in Vietnam stock market.
1.5. New contributions of the thesis
1. Determine the study theoretical basis on the factors affecting fraudulent

financial statements of listed companies consistent with the context of
Vietnam's stock market
2. Through interviews with experts in stock market, finance and audit, the
author has developed new 10 measurement criteria of group 3 independent
variables include legal environment, macroeconomic environment and the
control of the State for fraud financial statements, which fit the actual situation
in Vietnam.
3. Develop and test a model study of factors affecting fraudulent financial
statements of the listed companies on the stock market of Vietnam. The results
of surveying 485 auditor show that, in 12 independent variables of explaining
significant causes of fraudulent financial statements of the listed companies,
there are eight variables with positive signs which suggests a positive
relationship between these variables and the dependent variables mean
fraudulent financial statements. 4 remaining variables include the characters of
Board of Directors, control of the State, Independent Auditors and the
qualifications of managers have a negative correlation to the fraudulent
financial statements, which demonstrate that the greater impacts these factors
have, the less likelihood fraudulent financial statements happen in listed
company in the securities market of Vietnam.
1.6. Research process


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Based on research objectives and research questions, process of thesis
research is reflected in the following diagram:
Research objectives

1. To build research models.

2. To identify the reasons for fraudulent
financial statements of the listed companies

3. To analyze the impact of these reasons
for frauds in the financial statements
company listed on Vietnam Stock Market

Research Methodology

- Overview of
relating studies
- Qualitative
methods

Fin
dings

Quantitative
methods

4. Recommendations.

Figure 1.1: process of thesis research
1.7. Structure of the thesis
The thesis includes 5 chapters as follows:
Chapter 1: Introduction about research topics
Chapter 2: Rationale for fraudulent behaviors towards financial statements
of listed companies and the influencing factors

Chapter 3: Research Methodology
Chapter 4: Findings
Chapter 5: Discussion of findings and recommendations.
CHAPTER 2:
THE LITERATURE REVIEW OF FRAUDULENT BEHAVIOR OF
FINANCIAL STATEMENTS OF LISTED COMPANIES AND OTHER
INFLUENTIAL FACTORS
2.1. Overview of fraudulent financial statements
2.1.1. The concept of frauds and fraudulent financial statements
2.1.1.1. The concept of fraud
Around the world, Edwin H. Sutherland, the researcher on American crimes
who gave birth to the term "white - collar crime", refers this concept to fraudulent

behavior by the senior executives of the company cheating the public. The later
studies have used this term to replace other common terms of frauds.
In the scope of research, the thesis focus on fraudulent behaviors in
accordance with the Vietnam Auditing Standards No. 240 (VSA
240). Accordingly, "Fraud is an intentional act by one or more persons in the
Board of Management, Board of Directors, employees or third party done by the
fraudulent acts to gain illicit or illegal interests".
2.1.1.2. The concept of fraudulent financial statements
Based on the term "white - collar crime" by Edwin H. Sutherland,
fraudulent behaviors towards financial statements often refer to fraudulent
behaviors by managers of listed companies. The concept of fraudulent financial
statements fraud are mentioned by many researchers.
Within the scope of research, the thesis focuses on fraudulent behaviors in
accordance with the Vietnam Auditing Standards No. 240 (VSA 240). According
to VSA 240 and ISA 240, "Frauds in financial statements are behaviors of
changing and tampering with accounting documents; behaviors of falsifying or
intentionally not presenting or deliberately omitting important information of

financial statements; behaviors of intentionally misapplying, not complying with
accounting principles in setting financial statements to cheat the users of financial
statements"(Ministry of Finance, 2012).
2.1.1.3. Distinguish frauds with errors of financial statements
To reinforce arguments for fraudulent behaviors of financial statements, it is
necessary to differ errors of financial statements from fraudulent behaviors of
financial statements to recognize the sophistication and seriousness of such
fraudulent behaviors. Although errors are far from fraud in terms of science, they
still easily become confused in terms of influent factors.
Frauds and errors are all potential mistakes in the financial statements of
enterprises, falsifying calculations reflected in the financial statements and hereby
the actual business situation of enterprises.m
In this thesis, the author focus studying fraudulent behaviors of financial
statements due to spillover effects of this behavior to listed enterprises in Vietnam
stock market and the sustainable development of listed companies in Vietnam
stock market.


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2.1.2. Forms of fraudulent behaviors of financial statements.
The results of reaseachs by the COSO (2010), Ngo Thi Thu Ha (2007),
ACFE (2012), Nguyen Thi Huong Giang (2013), Le Nguyen The Cuong (2013)
show that the overblown declaration in profits / assets is the common form of
fraudulent behavior of the financial statements by listed companies. Thus, the
thesis focuses on studying this common form.

The following characteristics of listed companies impact financial

statements:
- The number of shareholders: The number of shareholder of listed
companies fairly complex and change from time to time, which is difficult to
control.
- Mechanisms and Management: The operations of listed companies are
controlled from many legal regulations within and outside company. This is
sources of pressure to the management of listed companies.
- The requirements of high transparency and very sensitiveness towards
financial statements of listed companies: This could be motivations of fraudulent
behaviors of statements in order to match with such requirements.
- Characteristics of business line of listed companies if complex and various
will be difficult to detect fraudulent behaviors of financial statements, which
requires auditors must be experienced, professional with multidisciplinary
understanding and the auditing procedure must be professional.
- Monitoring business targets reflected in financial statements is fairly
complex and often highly variable, which give opportunities for listed companies
to make fraudulent behaviors of financial statements for its self-interest.
- The business of listed companies is usually different, may be in forms of
parent company with subsidiaries, cross-investments, operating throughout the
country, which make auditors difficult to detect fraudulent behaviors of financial
statements if happens.
- The internal control systems of listed companies still weak.

2.1.3. Execution engine of fraud financial statements.
In this thesis, the author generalizes some popular motivations of fraudulent
behaviors of financial statements, namely financial stability, pressure from third
parties and financial goals.
2.1.4. Drawbacks of fraudulent behavior of financial statements
For listed companies which have frauds in their financial statements, if they
are detected, they will suffer serious consequences such as bankruptcy and severe

reduce in prestige.
For investors who focus most on the efficient use of capital, if financial
statements intentionally are frauds, their expectations for listed companies will
become too high or too low and hereby directly affect the profitability of capital
and even lose capital invested in.
For lenders especially the financial institutions like banks, they will be more
risks when lending such businesses. In case of such enterprise become insolvent,
the system of banks will be affected in general and hereby reduce the national
economic growth.
For tax authorities and related agencies: reduce the amount of tax payable
and tax losses and hereby reduce the budget revenues of the state, adversely
affecting the growth and prosperity of the country.
2.1.5. Some common problems of the stock market and companies
listed on the stock market affect financial statements.
2.1.5.1. Stock market.
Under the Securities Law of Vietnam, No. 70/2006/Congress 11 and
amended by the Law No. 62/2010/Congress 12, "Stock market is a market
organized where buying and selling listed securities are implemented"
2.1.5.2. Companies listed on the stock market
Features of listed companies affect financial statements

2.2. The theory applied to study fraudulent behaviors of financial
statements of listed companies
Historical development of research projects related to fraudulent behaviors
through the platforms of theory as follows:
- The theory of information asymmetry
- Representative Theory
- Scales theory of frauds based on red signs
- Fraud triangle theory

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2.3. Overview of research on influent factors towards fraudulent
behaviors of financial statements of listed companies.
In addition to an overview of research on the topic, the thesis focuses
summarizing relevant research on factors affecting fraudulent behaviors of
financial statements which are considered in many different aspects. Accordingly,
groups of factors include:

Qualitative methods are used to explore, adapt and complement the
variables used to measure the factors and criteria used in the study, ensure the
scale developed in accordance with theory and concretized by reality.
First, this method is implemented by studying documents and conducted a
review of previous studies in Vietnam and in abroad, thereby determining the
factors affecting fraudulent behaviors of financial statements. Next, this method is
implemented through in-depth interviews with experienced experts in securities,
finance and accounting.

2.3.1. Factors of motivation/ pressure
- Financial Stability
- Pressure from 3rd party
- Financial Goals
2.2.1. Factors of opportunity
- Characteristics of financial statements and business activities of listed
companies
- The quality of internal control systems
- Business scale of listed companies

- Characteristics of board of directors of listed companies
- Legal environment
- Macro - economic Environment
- Independent audit
- Control of the state
2.2.2 Attitudinal factors
- Standards of professional ethics of leadership
- Professional qualification of leadership
- Awareness and understanding of leadership about legal system
- Attitude, professionalism of the leadership
CHAPTER 3:
RESEARCH METHODS OF FACTORS AFFECTING FRAUDULENT
BEHAVIORS OF THE FINANCIAL STATEMENTS OF LISTED
COMPANIES IN VIETNAM STOCK MARKET
3.1. Qualitative methods

3.2. Quantitative methods
The author used the results of interviews with such experts as the input for
quantitative research methods. In this method, the author used survey to statistical
description of fraudulent behaviors of financial statements and conduct research
hypothesis.
On the basis of theory, reality and results of situation analysis and expert
consultancy, the author inherited the research model of triangular fraud and
model of fraud scales to develop the research model of the thesis.
Based on such research models, the hypotheses set as follows:
H: factors of pressure /motivation (DCAL), opportunity (CH), attitude (TD)
of managers have impacts on frauds in setting financial statements of the nonfinancial companies in the stock market of Vietnam.
The factors selected for the survey includes 15 elements (3 factors of
pressure/ motivation; 8 factors of opportunity; 4 factors of attitude of
managers). These factors are assessed as popular and important factors through

studies in Vietnam and over the world, results of in-depth interviews with experts
in the field of securities, finance and accounting in Vietnam.


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Samples (selected respondents) to send the survey is the independent
auditors.
Collecting data: Total votes that the author surveyed was 650, under two
forms: Send by mail and send directly to the surveyed respondents. Total votes
surveys recovered 485 valid votes (accounting for 74.62%). The responses
received had high reliability and expressed the respondents’ consciousness to the
answer as well as their deep understanding of the questions in the survey. Then
declare and transfer the data in SPSS. Test the reliability of the scale for the
variable factors with Cronbach Alpha index. Finally evaluating the results of
descriptive statistics.

Financial Stability (H1)

Group
factors of
motivation
/ pressure

Pressure from 3rd party (H2)
Financial Goals (H3)
Characteristics and activities of the
professions listed company (H4)

The quality of internal control
systems (H5)
Scale listed company (H6)
Characteristics of the board
listed company (H7)
Regulatory environment (H8)

Group of
opportunity
factors

Macro economic Environment
(H9)
Independent audit (H10)
Control of the state for acts of
fraud financial statements (H11)

Standards of professional
ethics of leadership (H12)
Professional qualification of
leadership (H13)
Awareness, understanding of
the law of leadership (H14)

Group
attitudinal
factors

Attitude, professionalism of
the leadership (H15)

Chart 4.1: Research Models

FRAUDULENT
BEHAVIOR OF
THE
FINANCIAL
STATEMENTS

Data processing method
Step 1: Quantifying the standards of each group of factors by calculating the
minimum value, maximum value, average value, standard deviation
Step 2: Checking the reliability of scaling factors in the research model by
the means of Cronbach's coefficient alpha reliability and coefficient correlation of
total variation.
Step 3: Analyzing the factors explored EFA through SPSS 22 software
processing to remove criteria of observation not meeting the standards.
Step 4: Correlation analysis: The correlation analysis said whether there is a
relationship between variables in the model study with each other or not. If the
coefficient correlation is zero, the variables are independent of each other, other
correlations of variables can see the have a relationship with each other.
Step 5: Analyzing multiple regression will indicate the level of influence of
each factor to fraudulent behaviors of financial statements of listed companies in
the stock market of Vietnam through the regression coefficients.
The form of Multivariate regression model study as follows:
GL = α+ β1TC + β2AL + β3MT + β4NN + β5KSNB + β6QM + β7HĐQT
+β8PL + β9KIỂM TOÁN VIÊNM + β10KTĐL +β11KSNN + β12DĐ +β13CM
+β14NT +β15CN + ei

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CHAPTER 4:
RESEARCH RESULTS
4.1. Results of respondents’ demographic information
The years of experience of surveyed respondents is over 5 years in average,
accounting for over 90% and the rate of auditors having experience in fraud
detection is 76.7%. These rates proved the reliability of the survey of factors
affecting frauds financial statements at listed companies on stock market Vietnam
for the result of the thesis

4.3.1. Results of descriptive statistics
The results of the analysis run on SPSS shows that indicators of mean value
(mean) and standard deviation (Std. Deviation) are high, which implied that they
are the factors affecting fraudulent behaviors of financial statements of the listed
companies in the stock market of Vietnam.

4.2. Findings of fraudulent behaviors of financial statements of
companies listed on Vietnam's stock market.
4.2.1. Results of descriptive statistics
In terms of forms of implementing fraudulent behaviors of financial
statements, the form of overdumbed declarations on profits / assets accounted for
the highest average value at 2.91 points, comparing to other two forms of
fraudulent behaviors of financial statements. In particular, conditioned form
profits / assets 2.85 points and the forms of frauds in understating (less common)
profit / assets (2.74 points).
In terms of evaluation criteria for the factors affecting fraudulent behaviors
of financial statements of listed companies in the stock market of Vietnam. The

survey results show that the criteria used to evaluate the fraudulent behavior of
the financial statements of listed companies usually based on criteria on how of
sophisticated performance and how difficult to detect common (4.48 points),
followed by the criteria of scale of fraudulent behaviors of financial statements
implemented (4.71 points) and the criteria frequency of of such frauds (4.17
points).
4.2.2. Assess the reliability of the scale
As a result of testing the reliability of the scale, Cronbach's alpha indices are
greater than 0.8 demonstrate that the scale will ensure the reliability of measuring
the popularity of the form, manner and items potentially frauds in setting
financial statements and factors affecting fraudulent behaviors of financial
statements in the stock market in Vietnam.
4.3. The results of research on factors affecting fraudulent behaviors of
financial statements of listed companies listed in Vietnam's stock market.

4.3.2. Testing the reliability of the scale factors in the research model.
Results after testing the reliability of the scale of 15 factors in the research
model evaluating the effects of these factors on fraudulent behaviors of financial
statements of the listed companies in the stock market of Vietnam based on the
Cronbach Alpha and generation system of total correlated variables to remove
two criteria of measurement, namely the activity of testing, monitoring and
degree of changes of tax policy because of their low correlation coefficients
4.3.3. Result of analysis to discover factors EFA
The use of analytical methods to discover factors that will help the author
abstract from many observed variables into the underlying components which
represent the entire data. By methods of analysis to discover factors, there is no
distinction between independent variables and the dependent variable (Hair et al,
1998). Therefore, the author analyzed the factors explored with the same
independent variables and the dependent variable in the model are analyzed
separately. To be able to apply the EFA analysis, variables must be

interrelated. To ensure the explanation of contents of the factors obtained from
analysis results EFA, the author select criteria factors as follows:
- Factor loading> 0.5
- 0.5 - Inspection of Bartlett test with Sig <0.05
- The variance explained> 50%
Toolkits with variance explained at a high level. This result is consistent
with the results of the author when building toolkit as well as the previous authors
have used. This could be explained that the toolkit was evaluated on an issue, thus
the basic content was divided into different groups. This represents high level of
the stability of toolkit.


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4.3.4. The results of correlation analysis
The purpose of performing correlation analysis is to determine whether or
not there is a linear relationship between the dependent variable of the fraudulent
behavior of financial statements and independent variables (15 impact factors
mentioned above). The result of this analysis is the basis for regression
analysis. Also, the correlation analysis also serves as a basis for detecting the
phenomenon of multicollinearity in the research model. If the correlation
coefficient is 0, you can view the variables are independent from each other. If
the correlation coefficient is other than 0, you can view the variables analyzed
have a relationship with each other. Results of research on the relationship
between variables correlation is obtained as follows:
Based on the results of the analysis, the value of P-value corresponding to
each independent variable with the dependent variable is the fraudulent behaviors

of financial statements of companies listed in Vietnam's stock market, which have
the value smaller than the significance level of 0, 05. And other Pearson
correlation coefficient of 0 proved that there is correlated relationship between
independent variables and the dependent variable.

The level of interpretation of the model
To assess the suitability of the model, we based on the F-statistic values and
the Adjusted R2

4.3.5. Results of multivariate regression analysis
Regression analysis is to assess the impact of these factors to the fraudulent
behavior of the financial statements company listed in Vietnam’s securities
market. Due to the correlation between the independent variables and the
dependent variable is quite tight, it is necessary to test multicollinearity before
performing regression analysis. Multicollinearity phenomenon (Multicollinearity)
is the phenomenon that independent variables have almost linear relationship with
each other. Ignoring multicollinearity often lead to the fact that standard errors
are higher, statistical value are lower and even not meaningful. To examine this
phenomenon, we use a measure of magnification variance (Variance Inflation
Factor - VIF) to test the phenomenon of correlation between independent
variables. Provided that VIF <2 is no multicollinearity Nguyen Dinh Tho (2013),
(Dinh Phi Ho, 2014).
Results showed that at VIF of the variables included in the model are very
low, less than 2. So multicollinearity does not occur between these variables.

Model Summaryb
Model

R

R2

1

,757a

,573

Adjusted Std. Error of
R2
the Estimate
,560
,21549

Durbin-Watson
1,972

a. Predictors: (Constant), CN, HĐQT, ĐĐ, KTV, KSNB, CM, MT, AL,
NN, KTĐL, NT, TC, PL, QM, KSNN
b. Dependent Variable: GL
Worth R2 adjusted (Adjusted R2) = 0.560. Parameter adjusted R-squared
indicates the level (%) of the variation of the dependent variable explained by the
independent variable. In this case, we can say the variation of the dependent
variable (frauds financial statements) due by the independent variables is
56%. Also, coefficient = 1.972 Durbin -Watson nearly 2 shows no autocorrelation
phenomena.
The relevance of the model.
The objective of this testing is to examine whether there is a linear
relationship between the variables independent and the dependent variable or
not. Model is considered as inappropriate one when all the regression coefficients

are zero, and the model is considered as appropriate one when at least one
regression coefficients is non-zero. Analysis of variance (Analysis of Variance ANOVA) was used to test the relevance of the model. If the level of significance
to ensure reliability at least 95% (Sig. <0.05), the model is considered relevant
(Nguyen Dinh Tho, 2013), (Dinh Phi Ho, 2014).
ANOVAa
Model
1

Sum of Squares

Df

Mean Square

F

Sig.

Regression

29,265

15

1,951

42,015

,000b

Residual

21,778

469

,046

Total

51,043

484

a. Dependent Variable:: GL


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b. Predictors: (Constant), CN, HĐQT, ĐĐ, KIỂM TOÁN VIÊNM, KSNB,
CM, MT, AL, NN, KTĐL, NT, TC, PL, QM, KSNN
ANOVA analysis showed that parameters F, Sig. = 0.000, indicating that the
regression model is suitable for the construction of the data collected, and the
variables included are significant statistically with a significance level of 5%.
Results of regression analysis of factors affecting the fraudulent
behavior of the financial statements company listed securities market on VN
Coefflcientsa
Variables

α
TC
AL
MT
NN
KSNB
QM
HĐQT
1
PL
KTV
KTĐL
KSNN
ĐĐ
CM
NT
CN

Yet standardized
coefficient
Standard
B
error

2,682

,118

,038

,038
,035
,034
,012
,025
-,058
,046
,005
-,040
-,071
,055
-,046
,053
,046

,012
,011
,011
,011
,014
,015
,014
,012
,012
,012
,013
,012
,012
,014
,014

standardized
coefficient

Correlations

t

Sig

Beta

Zero
Partial Part Tolerance
-oder

VIF

22,810,000
,108
,112
,106
,100
,033
,063
-,147
,136
,013
-,118
-,205

,156
-,125
,126
,114

3,169
3,352
3,207
2,959
,898
1,736
-4,213
3,877
,409
-3,271
-5,473
4,713
-3,916
3,752
3,376

,002
,001
,001
,003
,370
,083
,000
,000
,683

,001
,000
,000
,000
,000
,001

,335
,357
,304
,292
,247
,270
-,383
,401
,106
-,374
-,465
,305
-,222
,322
,375

,145
,153
,146
,135
,041
,080
-,191

,176
,019
-,149
-,245
,213
-,178
,171
,154

,096
,101
,097
,089
,027
,052
-,127
,117
,012
-,099
-,165
,142
-,118
,113
,102

,781
,813
,830
,798
,669

,691
,745
,736
,948
,693
,651
,826
,894
,811
,794

1,280
1,229
1,205
1,253
1,495
1,447
1,341
1,359
1,055
1,442
1,537
1,210
1,119
1,234
1,259

a. Dependent Variable: GL
Source: analysis of results from the software SPSS
The regression coefficients of the model and the level of significance p-value is the

most important parameter for us to draw conclusions about the relationship between
variables in multivariate regression models.
Regression:
GL = 2.682 + 0.038TC + 0.038AL + 0.035MT + 0.034NN - 0.058HĐQT +0.046PL
- 0.040KTĐL - 0.071KSNN + 0.055ĐĐ - 0.046CM +0.053NT +0.046CN + ei

The author conducted a test to assess the factors affecting fraudulent
behaviors of financial statements of the listed companies in stock market of
Vietnam through assessing the significance of the regression coefficients βi pair
assumptions:
H0: βi = 0
H1: βi ≠ 0
Inspection results showed the significance of regression coefficient of 3
groups of factors. Thus, the hypothesis h0 is rejected while the hypothesis h1 is
accepted. This means that factors of motivation / pressure and factors of
opportunities and attitude really impact fraudulent behaviors of financial
statements of listed companies in Vietnam stock market. As follows:
4.1 As can seen in the table, there are 12 variables have a statistically
significant impact on fraudulent behavior of the financial statements of
companies listed in Vietnam securities market. Of which, 8 independent variables
have a positive relationship with the dependent variable. it was the 3 elements of
the factors of motivation/ pressure, namely the financial stability, the pressure
from third party and financial goals, which their betas show that higher and
higher pressures from such factors are, higher and higher the likelihood of such
fraudulent behavior are. The following 3 factors of attitude also have a positive
relationship with fraudulent behaviors of financial statements and statistically
significant, which shows more and more the violation of the attitude of the
directors become, higher and higher the likelihood of such frauds are. Finally, the
two factors of opportunities also have positive relationships with fraudulent
behavior of financial statements, namely characteristics of financial statements

and professional activities of the listed companies, legal environment.
The remaining 4 independent variables are related inversely to the dependent
variable. It is factor of independent audit with beta = -0118 and statistical
significance at 0.001 = <0.05. This shows that the listed companies which used
audit services from the BIG4 company is less fraudulent behaviors of financial
statements than ones not using audit services of the BIG4 company. The factor of
state control for financial statements has the beta = -0205 with statistical
significance = 0.000 <0.05, which shows that higher and higher the impact of this
factor become, higher and higher the likelihood of fraudulent behaviors of


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financial statements become. The factor of characteristic of the board of directors
and their professional qualifications also negatively correlated to the level of
fraud financial statements, which shows that higher and higher the impact of
these factors is, less and less the likelihood of such frauds become

On the other hand, the situation of stock market Vietnam today, the listed
companies have raised capital mainly from banks. The stock market should be
improved step by step to build a strong market, so the pressure in the
contradictions of the agency relationship between the creditor - managers
(business) will decrease, managers will limit violations binding contract and
which could impact positively on the provision of information to publish honest
figures and reasonable for the user information. Typically, when evaluating a
listed company, investors are mainly interested in the profitability of the shares or
the information on the business results in the financial statements (Charfeddine,
Riahi and Omri, 2013) so if listed companies operate inefficiently, the stock price

fell, hereby it would be difficult to attract investors. Therefore, to maintain
financial stability and achieve the financial goals, the listed companies in stock
market of Vietnam will attempt to make fraudulent behaviors of financial
statements. Thus, investors should be more cautious in the assessment of business
performance of listed companies through financial statements to provide the most
accurate investment.

CHAPTER 5
DISCUSSION OF FINDINGS AND RECOMMENDATIONS
5.1. Discuss research results on factors affecting fraudulent behaviors of
financial statements of companies listed in Vietnam's stock market.
5.1.1. Factors of motivation/ pressure
Factors of motivation/ pressure have the variables with positive impact to the
fraudulent behavior of the financial statements of company listed in Vietnam
securities market. In particular, the pressure on the board of directors to achieve
the financial goals of the company executives laid out; pressure from the
completion of procedures required for listed in the equity market; losses from
business activities that lead to the ability of bankrupt or delist on equity
market; margins or expectations of third parties, the unrealistic optimist of board
of directors about the information in the annual report, have created the
motivations of making frauds in financial statements of such companies.
This is explained by the characteristics of the stock market in Vietnam where
still has many shortcomings, risks and mostly short-term investments who only
interested in the company with rapid profitability and lack of organizations of
market making. Moreover, many investors in Vietnam lack the necessary basic of
knowledge, lack of analysis and prediction, who often invested through emotional
factors and affected by sentiment. According to research by the authors, Nguyen
Hong Vietnam Thanh et al (2013) about the psychology of Vietnamese investors
"investors in Vietnam with investment sentiment pack, psychological investment
in movement, lack of knowledge, lack of own expectations." Due to the lack of

professionalism and lack of knowledge, most investors sometimes just interested
in companies with high profits, this makes the listed companies face pressures to
maintain high profit margins and stable to retain or attract new investors. With
such features, it is clear both listed companies and the investor will need to have
sustainable solutions to jointly build a true modern and efficient stock market.

5.1.2 The factors of attitude
The second factor with common impacts to frauds in setting financial
statements is the of factors attitude (board of directors deliberately intervene in
accounting policy to edit data and the excessive attention of directors to maintain
and increase the price of shares, directors have moral weaknesses, limiting
auditors to work with employees and providing information to the board of
directors of the company about frauds in financial statements). Based on the
results of multivariate regression analysis showed that:
Factor of "Standards of profession and ethics of the board of directors"
(DD) has positive relationship with fraudulent behavior of financial statements of
the listed companies in stock market of Vietnam, with coefficient = 0.156 p-value
= 0.000 and <0.05. This means that higher and higher companies listed in
Vietnam securities market have breach of profession and ethics standards, higher
and higher the likelihood of fraud financial statements become.
Factor of "qualification and profession of the board of directors" (CM) is
related inversely to the fraudulent behavior of financial statements of such
companies, coefficient = - 0.125 and p-value = 0.000 and <0.05. This means that


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more and more professional the board of directors of companies qualified, higher

and higher their capacity in identifying frauds pressed in financial statements,
hereby reduce risks related misstatement of financial reports of their compainies.
Factor of "Awareness and understanding of laws of the board of directors"
(PL) has positive relationship with fraudulent behavior of financial statements of
listed companies in stock market of Vietnam, which has coefficient = 0126, pvalue = 0.000 and <0.05. This means less and less their consciousness about laws
are, higher and higher the possibility of fraud as many financial statements is.
Factor of "attitude and professionalism of directors" (CN) has positive
relationship with fraudulent behavior of financial statements of the listed
companies in Vietnam stock market, which has coefficient = 0114 with p-value =
0.001 <0.05. This means that greater and greater companies listed on Vietnam
securities market violations of attitude and professionalism of directors become,
higher and higher the likelihood of fraud as much financial statements is.

coefficient p-value are> 0,05. They are: Internal control of quality system and
risk, Macroeconomic environment and size of listed companies. The mismatch of
these factors in the prediction of fraudulent financial statements could be
explained as follows: There are no mandatory provisions on the right to establish
and maintain internal controls for listed companies. Currently the maintenance
requirements and establishment of internal controls mainly prescribed in the
enterprises in financial sector but other sectors. Therefore, listed companies
themselves will have no sense of building and maintaining internal controls
mandatory. On the other hand, the scale of listed companies in Vietnam now is
generally small, at family level, therefore, they are ometimes not really interested
in establishing and maintaining internal controls.
The research results of the thesis coincides with the findings of Albrecht
and Romney (1986), Heiman et al (1996), Bell and Carcello (2000), Apostolou et
al (2001), Graham and Bedard (2003) , Moyes et al (2005), Mock et al (2005),
Moyes (2007), Gullkvist and Jokoppi (2012) and Albullatif (2013), Tran Thi
Giang Tan et al (2014). However, the research results of the thesis is not
accordance with the studies by Apostolou et al (2001), Gramling and Myres

(2003), Moyes et al (2005), Moyes (2007), Gulkvist et al (2012), Albullatif
(2013) suggesting that factors having the manager's attitude popular and largest
impact to commit fraud against the group financial statements chance factors and
pressures.

5.1.3. The factors of opportunities
The factors of opportunities: Of the eight factors of leading factors of
chances, there are 5 factors to significantly explain the cause of implementing
frauds in financial statements of listed companiesion the stock market of
Vietnam. Particularly, factors of "Characteristics of financial statements and
professional activities of listed companies" (NN) has positive impacts on
fraudulent behavior of financial statements of listed company in stock market of
Vietnam, which has beta = 0.100 and p-value = 0.003 <0.05. With this result,
more and more complex the characteristics of financial statements and activities
of listed companies are, higher and higher the ability to perform frauds in
financial statements. In Viet Nam, items /professional of the financial statements
of listed companies is often complicated because of items such as inventory and
financial investments difficult to assess the truthfulness and reasonability. This
will be increasingly difficult for auditors in collecting the relevant evidence as
well as the ability to detect frauds, thus resulting in the audits’ opinions can not
warranted, which will be an opportunity for the listed companies perform frauds
in financial statements. In addition, the results of regression analysis in Table
4.29 also shows that among factors of opportunities, there are 3 factors that
relationship is very weak with fraudulent behavior of financial statements with

5.2. Recommendations
5.2.1. Recommendation for listed companies
The listed companies should improve mechanisms of corporate governance
to promote the efficiency of operation and enhance the corporate’s value, which
help to attract investment for long-term development and sustainability in stock

market of Vietnam.
Listed companies should maintain, design and improve the quality of
internal control to prevent fraudulent financial statements effectively.
Listed companies should adjust to minimize the impact factor of fraudulent
behaviors of financial statements.


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5.2.2 Recommendations for audit companies and auditors
The audit firm should strengthen their control of quality of audit financial
statements.
They also should need deepen experience and increase the professional
prudence and the professionalism of auditors

companies and VACPA should establish the Program of cross-check firms
accounting listed companies.
Eighthly, the State Securities Commission should strengthen accountability
of fluctuation information of financial statements of listed companies.

5.2.3. Recommendations for investors
Investors should be aware of using financial statements of listed companies
before making investment decisions.
Investors should evaluate listed companies in the general conditions of the
whole economy and not to put pressure too great for maintaining and increasing
stock prices for listed companies.
Investors need to enhance their knowledge about a full review with more
information on the financial statements and the management of listed companies

to adopt appropriate policies in making decisions of early investment.
5.2.4. Recommendations for the Vietnam Association of Certified
Public Accountants, the Ministry of Finance and the State Securities
Commission
Firstly, the sanctions for violations in the establishment of the financial
statements listed company should be strengthened.
Second, the disciplinary action against audit firms which violate the
provisions on audit of the financial statements listed company should be
strengthenend.
Thirdly, upgrading Vietnam accounting standards consistent with
international accounting standards.
Fourthly, develop a roadmap for researching, drafting and issuing circulars
guiding the audit standards, especially the fundamental auditing standards
including auditing standards VSA 240.
Fifthly, auditors in Vietnam should practice more and improve professional
auditing skills.
Sixthly, the Ministry of Finance should supplement VSA No. 701 "Notice
of the important audit issues in the audit report of the auditors’ independence".
Seventhly, the State Securities Commissions state should establish a
Committee monitoring the quality of auditing financial statements of listed

5.3. Some limitations and suggests topics for future researches
5.3.1. Limitation of the thesis
Firstly, the content of the thesis focuses on fraudulent behavior financial
statements of the listed companies on stock market Vietnam without examining
other common factors such as misappropriation of property.
Secondly, the thesis focuses on studying listed and nonfinancial companies
in stock market Vietnam but listed and financial companies such as banks,
institutions credit, etc and ... Also, the thesis did not focus on studying such
frauds in companies not listed in Vietnam stock market as private enterprises,

limited liability companies and company in abroad, etc.
Thirdly, respondents of the thesis focus on independent auditors but tax
inspectors and experts in fraud investigations.
5.3.2. Directions to future research
The thesis codified theoretical basis and factors affecting frauds financial
statements of the listed companies in stock market of Vietnam without studying
other aspects such as property embezzlement and price transfer between the
multinational corporations. Through the analysis of the limitations of the thesis,
the thesis pointed out some gaps for further research as follows:
- In terms of research scope, future research could examine property
embezzlement.
- In terms of the range of space research, it is possible to expand research
objects to companies not listed in the Vietnam stock market.
- In terms of the subject of the survey, future research can expand
respondent cadres to tax inspectors and experts in fraud investigations in order to
recognize more precisely the form of fraud financial statements.