Earnings, Book Value and the Limits of the Credibility Argument: Evidence from Non-Financial Listed Firms in Vietnam (2009–2024)

Two arguments in the literature bear on how accounting information should be priced in emerging markets. The first holds that where enforcement of financial reporting is weak, investors favour book value over earnings because book value depends less on managerial judgement. The second holds that value relevance falls when macroeconomic uncertainty rises. Vietnam offers an informative setting for both because reporting enforcement is uneven and measurable, individual investors supply more than eighty per cent of trading value, and the sample period contains unusually wide macroeconomic variation. Using 631 non-financial listed firms over 2009 to 2024 and 7982 firm-year observations, we find no supporting evidence for either prediction. Earnings carry more than twice the economic weight of book value, and the earnings result withstands selection on unobservables more than four times that on observables, against approximately one for book value. Value relevance is no weaker among small firms, where full disclosure compliance is roughly 50 per cent, than among large firms, where it is roughly 85 per cent. Testing state dependence item by item through interaction terms rather than through aggregate explanatory power, the valuation weights on earnings and book value are statistically indistinguishable across favourable and adverse states under two independent definitions, while the weights on operating cash flow and firm size shift significantly. The results hold under lagged, dynamic and logarithmic specifications.