- Factors Influencing the Choices of Accounting Policies in Enterprises Listed on the Hanoi Stock Exchange (HNX). - Analyzing factors influencing the choices of accounting policies in listed companies on the HNX. - The study aimed at investigating factors affecting the selection of accounting policies based on the quantitative research, using Ordinary Least Squares regression method (OLS). - The author finds that there are nine factors influencing the selection of accounting policies in firms listed on the NHX. - The difference is that auditors have a significant influence on the selection of accounting policies in enterprises.. - These choices are captured in the accounting policies of the entities and are the foundation of drawing up and interpreting their financial statements such as financial position, performance and cash-flows of the period. - The purpose of this study is to investigate the factors influencing the selection of accounting policies of managers of listed companies on the HNX. - Previous studies proved that managers are able to choose accounting policies to increase or decrease the reported income (Beattie, 1994. - The results of this study are important for managers of listed companies in the HNX in determining the flexibility of accounting practices as well as explanations needed to support users of financial statements.. - Literature review shows that researchers in Vietnam as well as in the world have studied on the factors affecting the selection of accounting policies of enterprises from different perspectives. - These studies have drawn the important role of factors affecting the choice of accounting policies to increase or decrease income of enterprises.. - Ashtami and Tower (2006) found no correlation between enterprise size and selection of accounting policies to increase or decrease income in Switzerland, Saudi Arabia and the Asia Pacific region.. - Inoue and Thomas (1996): proved that the degree of financial leverage has a positive effect on the choices of accounting policies to increase income. - However, Missioner (2004) pointed out that financial leverage have no impact on the choices of accounting policies to increase incomein the context of Sweden. - So managers will choose policies to delay reporting of income (Cullinan and Knoblett, 1994). - When the degree of ownership dilution is high, managers will choose accounting policies to increase incometo increase their remuneration, create trust in shareholders, and establish reputation for professional competence (Missonier, 2004). - Inoue and Thomas (1996) pointed out that the capability of internal financing of a company is an important factor influencing the choices of accounting methods by Japanese managers. - Therefore, in order to reduce negotiating costs, companies that rely more on internal capital will choose accounting policies to decrease income to use retained earnings to invest in new projects. - Waweru, Ponsian Prot Ntui, Mangena (2012) also found that internal financing was one of the four most important factors influencing the choices of accounting policies to reduce income in Tanzanian enterprises.. - Hagerman and Zmijewski (1978) examined the US context and proved that market risk is closely related to the choices of accounting policies to increase income. - Cotter (1999) and Gupta (1995) stated that managers have an incentive to use accounting policies to increase accounting income if part of their income derived from the incentive plan.. - Nguyen Thi Phuong Hong, Nguyen Thi Kim Oanh (2014) found that the incentive policies for managers have no impact on the selection of accounting policies in small and medium enterprises in Vietnam.. - The study of Schwartz (1982) examined changes in accounting policies of 163 enterprises considered to be in a financial distress and found that companies in financial distress actively change their accounting policies to increase income. - Masahiro Enomoto (2015) investigating firms on the verge of bankruptcy and major financial crises in Japan showed that companies choose accounting policies to increase income to improve their financial position.. - Yamaguchi (2013) stated that new managers will use accounting policies to reduce income if actual incomeare much lower than anticipated, in the first financial year after their appointment.. - On the contrary, Shuto (2010) and Masahiro Enomoto (2015) found that new appointed managers tend to use accounting policies to increase income to establish their images.. - Okabe (1994) focused on the relationship between changes in accounting policies and the ownership structure of Japanese companies and showed that companies are more likely to change their accounting policies to reduce income if banks have high management power or high ownership in the companies. - His research stated that a high proportion of bank ownership will lead to many changes in accounting policies to increase or decrease incomeas banks are both shareholders and creditors.. - (1995) who provided that managers do not maximize corporate value, thereby, the ownership ratio of managers will encourage managers to choose accounting policies to reduce income.. - Tawfik (2006) investigated variables affecting the choices of accounting policies in Saudi Arabia. - The study showed strong evidence to support that the selection of accounting in Saudi Arabia is not affected by the ownership ratio of managers.. - DeAngelo (1981) supposed that larger audit firms with have higher audit quality, so companies audited by large audit firms are less likely to change their accounting policies regardless whether these changes is to increase or decrease income.. - Takeda and Muramiya (2013) provided that when changing accounting policies to reduce income can improve the financial health of a company, auditors may pay less attention on this and focus more on changes that increase income.. - The author found that large audit firms are effective in restraining changes in accounting policies that increase income.. - Shaheen (2012) showed that there is a positive relationship between the profitability of the business and the choices of accounting policies. - It means that the higher the profitability ratios, the more likely the managers will choose accounting policies to increase income.. - Nguyen Thi Phuong Hong, Nguyen Thi Kim Oanh (2014) also found that the profitability trend has a positive impact on the choices of accounting policies to increase income in small and medium-sized enterprises in Vietnam.. - Therefore, in order to avoid political costs, corporate managers will adopt accounting policies to reduce incomeaccounting policies. - Based on the review of prior studies in Vietnam and in the world, this paper have found 16 factors affecting the selection of accounting policies and accounting estimates in enterprises but some factors are similar, some are different. - With the same factor, the extent of impact on the choices of accounting policies may be different in countries. - Therefore, it is critical to examine if these factors are relevant to the application of accounting policies in Vietnam as the market economy in Vietnam has many differences compared to countries of previous studies.. - Based on the overview of prior research on the factors affecting the choices of accounting policies, research gaps were identified and hypotheses were developed to predict the factors influencing the selection of accounting policies. - Based on the obtained results after analyzing, the author discussed the results and provided recommendations and suggestions to subjects such as business executives, investors and the state agencies on the ability to use the accounting information on the financial statements for the selection of accounting policies to help them make business decisions, investment decisions.. - Research gaps in prior studies on factors affecting the selection of accounting policies in enterprises in Vietnam. - Accounting Policies to increase or decrease income. - H1: The larger the company size, the more likely it is that managers will choose accounting policies to reduce reported income.. - Due to the dependence on debt, managers have incentives to choose accounting policies to increase reported income to ensure that the companies comply with debt obligations imposed by bond holders and banks as well as avoiding renegotiation costs (Inoue and Thomas, 1996. - H3: The higher the level of labour force intensity, the more likely it is that managers will select accounting policies to reduce reported income.. - Therefore, it is more likely that managers will choose accounting methods to increase income to increase their salaries. - H4: the higher the level of ownership dilution, the more likely it is that managers will select accounting policies to increase reported income.. - H5: The higher the level of internal financing, the more likely it is that managers will choose accounting policies to reduce reported income. - H6: the higher the proportion of non-executive directors, the more likely that managers will choose accounting policies to reduce reported income. - H7: the higher the market risk of enterprises, the more likely it is that managers will choose accounting policies to increase reported income.. - H8: If enterprises have incentive plans, managers are more likely to choose accounting policies to increase reported income.. - (1988), The higher the level of financial distress a company faces, the more likely it is that companies will change their accounting policies to increase income. - H9: The higher the level of financial distress of a company, the more likely it is that managers will choose accounting policies to increase reported income. - Shuto (2010) supposed that new appointed managers will select accounting policies to increase income to establish their images. - H10: New appointed managers are more likely to select accounting policies to increase reported income.. - Okabe (1994) based on the perspective of ownership, stated that income will create disadvantages when negotiating which makes to banks, as owners, seek to prevent managers from adopting accounting policies that can increase income. - H11: The higher the bank ownership ratio, the more likely it is that managers will select accounting policies to reduce reported income.. - Okabe (1994) found that a high management ownership ratio will make managers avoid accounting policies to increase income in order to avoid disadvantageous position when negotiating due to increase in income. - H12: The higher the management ownership ratio, the more likely it is that managers will select accounting policies to reduce reported income.. - This result is in line with the expectation that companies will not choose accounting policies to increase income. - H13: If companies are audited by the big audit firms, managers are more likely to select accounting policies to reduce reported income.. - H14: Enterprises with high net profit to revenue ratio are more likely to choose the accounting policies to increase income. - This hypothesis can be tested by the relationship between the profitability ratio of a firm and the choices of accounting polices. - Shaheen (2012) provided that there is a positive relationship between the profitability of an enterprise and the choices of accounting policies to increase profits of enterprises.. - H15: Enterprises with high governmental equity are more likely to select accounting policies to reduce reported income.. - Therefore, in order to avoid political costs, corporate managers will adopt accounting policies to reduce profits.. - H16: Companies with high capital intensity are more likely to select accounting policies to reduce reported income.. - The author used descriptive statistics to analyze the factors affecting the choices of accounting policies in companies listed on the HNX.. - To analyze the factors influencing the selection of accounting policies in enterprises listed on the HNX, the author used multivariate regression analysis with the following formula.. - IP: The incentive plan is determined by announcement of the company's incentive plan on the annual financial statements. - Selection of accounting policies is displayed in table 1. - Table 1: Choices of accounting policies affecting profit strategy. - Accounting policies Increase income Decrease income. - This is consistent with positive and normative accounting theories which argue that managers choose accounting policies to maximize their benefits. - The model of analyzing the factors influencing income-increasing accounting policies is as follows:. - Research shows that leverage is a factor explaining the choice of accounting policies, so the hypothesis H2 is supported. - The higher the level of labour force intensity, the more likely that managers will select accounting policies to increase income, hypothesis H3 is supported. - The higher the level of financial distress, the more likely it is that managers will choose income-increasing accounting procedures, hypothesis H9 is supported. - In companies audited by big audit firms, managers tend to choose accounting policies to reduce income, hypothesis H13 is supported. - In enterprises with high capital intensity, managers prefer accounting policies to reduce income, hypothesis H16 is supported. - This paper aimed at investigating factors affecting selection of accounting policies of managers in 100 companies listed on the HNX. - Capital intensity which may impact choices of accounting policies of executives. - The results showed that 9 factors influence selecting of accounting policies in which 4 factors are associated with income-increasing accounting policies: management turnover. - 05 factors are associated with income-decreasing accounting policies. - 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