ABSTRACT: The study was conducted based on a sample consisting of 145 listed industrial firms in Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) of Vietnam for the period of 2017-2023, aiming to investigate the impact of financial leverage on earning management under the moderating role of the COVID-19 pandemic. Results from regression models show a negative effect of financial leverage on earning management, which is consistent to “control hypothesis” and also show the influence of COVID-19 in which the level of earnings management before and after COVID-19 is lower than those during the COVID-19 period. In addition, it was found that COVID-19 plays a role of weakening the negative effect of financial leverage on earning management. These findings are consistent with two measures of accrual earning management (Jones’ discretionary accruals and Dechow’s discretionary accruals). The paper provides additional empirical evidences for research on earning management, thereby drawing some implications related to the use of debt financing in connection with earning management, especially in such context of significant economic fluctuations like COVID-19 pandemic.

KEYWORDS – Accrual earning management (AEM), COVID-19, Earning management, Financial leverage, Vietnamese industrial listed firms.