Determinants of accounting quality of SMEs: Empirical study of individual investors in southern Vietnam

Abstract

Accounting quality is critical to any business's success, especially when it comes to meeting the expectations of stakeholders having a special interest in the firm. This study aims at evaluating the accounting quality of small and medium enterprises (SMEs) in Southern Vietnam to see if it is efficient, transparent, and adherent to various domestic and internal standards. Especially, this study focuses on additional aspects that can assist to enhance the quality of accounting and accounting data by examining certain key determinants of accounting quality among SMEs across different economic sectors in Southern Vietnam. Based on the data collected from 247 individual investors, this study finds that the accounting quality of investigated SMEs is affected by several major factors, including risk assessment, internal audit, internal control, and compliance as well as communication channels, among others. It is also found that the availability and utilization of high-quality, timely data in SMEs had a substantial impact on the accounting quality perceived by individual investors. From such findings, some managerial implications have been proposed to enhance its quality.