Financial reporting quality and firm value in Vietnam: The moderating role of a composite CEO index

Abstract

This study investigates how financial reporting quality (FRQ) affects firm value (FV) among listed companies in Vietnam, with particular attention to the moderating role of CEO characteristics. Instead of examining separate CEO attributes, the study develops a composite CEO index that captures seven dimensions of CEO-related characteristics, thereby providing a broader view of managerial influence on firm valuation. The analysis is based on a balanced panel of 427 firms listed on the Ho Chi Minh and Hanoi Stock Exchanges over the 2016–2023 period, generating 3,416 firm-year observations. Several panel regression approaches, including OLS, FEM, REM, and GLS, are employed, while model selection and diagnostic tests are used to ensure the suitability and reliability of the estimations. The results indicate that FRQ has a negative effect on FV, suggesting that in an emerging market context, higher reporting quality may not always be immediately translated into higher market valuation. However, the composite CEO index positively moderates this relationship, implying that stronger CEO characteristics can help reduce the adverse effect of FRQ on FV. These findings highlight the importance of considering managerial quality together with financial reporting practices. For listed firms, improving reporting credibility should go hand in hand with strengthening CEO capacity and governance quality. For investors, CEO characteristics may provide useful additional information for firm valuation and long-term investment decisions.