The Impact of Earnings Management on the Trading Behavior of Institutional Investors – A Study in the Vietnamese Stock Market

Abstract The study examines the impact of earnings management on institutional investors’ trading behavior in listed companies in Vietnam. The results indicate that foreign institutional investors increase their net buy of stocks that engaged in earnings management the previous year. In contrast, earnings management does not influence domestic institutional investors. Additionally, foreign institutional investors increase their net purchases of firms that manage earnings upward, while downward earnings management shows no significant impact. The results indicate that regulatory authorities should implement measures to improve the quality of financial statements provided by listed companies to reduce risks for investors and the market.