Beyond One-size-fits-all: How Firm Size Moderates Corporate Governance Effects on Earnings Quality in Vietnam

This study examines the relationship between corporate governance mechanisms and earnings quality (EQ), with a particular focus on the moderating role of firm size in Vietnamese listed companies. Using panel data from 1,071 observations and employing generalised least squares (GLS) estimation to address econometric issues, we investigate how board independence (B_Inde), board size (B_Size), chief executive officer (CEO)-chairperson duality and board meeting frequency influence EQ, while controlling for financial leverage and COVID-19 effects. The findings reveal several important relationships. B_Inde significantly enhances EQ, with this positive effect being amplified in larger firms through significant moderation effects. B_Size demonstrates a positive relationship with EQ, contradicting concerns about coordination difficulties in larger boards. The COVID-19 pandemic significantly reduced EQ across all firms, reflecting crisis-period reporting challenges. Critically, firm size serves as a significant moderator in governance-EQ relationships. The interaction effects demonstrate that larger firms can better utilise both B_Inde and larger B_Size to enhance EQ. These results contribute to the corporate governance literature, demonstrating that optimal governance structures should be tailored to firm-specific characteristics rather than applying universal prescriptions.