Income smoothing in Vietnamese listed firms: do related party transactions make a difference

This study examines the relationship between related party transactions (RPT) and income smoothing (ISM) behaviour by using a sample of Vietnamese-listed firms in the period of 2015-2018. The author predicts a positive relationship between RPT and ISM because RPT can be considered a tool to apply earnings manipulation measured through ISM. By using the ordinary least square (OLS) regression method, the positive relationship between RPT and ISM is found. Besides, several robustness tests are conducted, and the research findings are confirmed. This study will help the regulator better understand how RPT relates to the stock market and what regulatory changes can be made to utilise the benefits of RPT in developing nations.