This study examines the relationship between dividend policy, cash holdings, and earnings management (EM) behavior among listed firms in Vietnam over the period 2016 to 2024. Grounded in agency theory and the free cash flow theory, the research empirically investigates the effect of dividend policy and cash holdings on the level of EM, utilizing four widely recognized EM measurement models. The dataset consists of 10,057 firm-year observations analyzed using fixed effects regression models, controlling for firm and year fixed effects. The findings indicate a statistically significant negative association between dividend policy and EM, suggesting that firms with higher dividend payouts tend to engage less in earnings management. Conversely, cash holdings exhibit a positive and significant relationship with EM, implying that firms with higher levels of cash reserves are more likely to manipulate earnings. Among control variables, state ownership and profitability are found to be negatively related to EM. These findings provide important empirical evidence on the role of financial policy instruments in mitigating managerial opportunism via earnings management. The study offers implications for investors, corporate managers, and policymakers in designing effective financial oversight mechanisms in emerging markets such as Vietnam.
Dang Ngoc Hung (2026) studied this question.