Type of the article: Research ArticleThis study examines the impact of financial reporting quality on firm value in the emerging market of Vietnam and tests the moderating role of financial constraints. Using a panel dataset of 5,654 firm-year observations from non-financial companies listed on the Vietnam Stock Exchange over the period 2016–2024 (excluding firms in the financial, banking, and insurance sectors, as well as observations with missing data or extreme outliers), and applying accrual-based measurement models, the empirical results reveal a finding that contrasts with traditional theory of the direct relationship: financial reporting quality negatively affects firm value, implying that greater transparency eliminates overly optimistic market valuations. However, the core contribution of the study lies in demonstrating the conditional nature of this relationship through signaling theory, whereby financial constraints act as a positive moderator that reverses the effect of financial reporting quality. Specifically, for firms facing substantial financial frictions, improving information quality becomes an important mechanism for reducing the cost of capital and enhancing valuation. Accordingly, the study resolves the theoretical gap concerning inconsistent prior evidence and confirms that the value of transparency is concentrated primarily among firms with limited access to external financing.
Tran et al. (2026) studied this question.