Volume 13, Issue 5 (May 2026), Pages: 268-282

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 Original Research Paper

Earnings quality of Vietnamese banks: A nonlinear perspective with generalized additive models

 Author(s): 

Chau Dinh Linh *

 Affiliation(s):

Business Administration Faculty, Ho Chi Minh University of Banking, Ho Chi Minh City, Vietnam

 Full text

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 * Corresponding Author. 

   Corresponding author's ORCID profile:  https://orcid.org/0009-0001-9547-625X

 Digital Object Identifier (DOI)

 
https://doi.org/10.21833/ijaas.2026.05.025

 Abstract

Earnings quality is important in the banking sector because of the complexity of banking operations and strict regulatory requirements. This study investigates the determinants of earnings quality in Vietnamese listed commercial banks during the period 2018–2024. A multidimensional earnings quality index was developed, and Ordinary Least Squares (OLS), panel regression, and Generalized Additive Models (GAMs) were applied to examine both linear and nonlinear relationships. The results show that deposit-based financial leverage has a positive effect on earnings quality in linear models; however, GAM results indicate that this positive effect weakens at higher levels of leverage. Bank size is negatively associated with earnings quality in linear models, while GAM results reveal a nonlinear relationship in which earnings quality decreases at medium levels of bank size but stabilizes or improves among the largest banks. Board gender diversity also demonstrates a nonlinear effect. Furthermore, GAM findings show that gender diversity moderates the relationship between board size and earnings quality. Larger boards are associated with lower earnings quality when female representation is low, but this negative effect becomes weaker as female representation increases. The GAM model provides greater explanatory power than the linear models (Pseudo R² = 0.6042 compared to the maximum OLS R² = 0.375), highlighting the importance of nonlinear and interaction effects in explaining earnings quality. These findings provide evidence from Vietnamese banks and suggest that governance structure and board composition should be considered in the evaluation of earnings quality.

 © 2026 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

Earnings quality, Nonlinear relationships, Generalized additive models, Corporate governance, Vietnamese commercial banks

 Article history

Received 7 January 2026, Received in revised form 13 May 2026, Accepted 28 May 2026

 Acknowledgment

This work was supported by Ho Chi Minh University of Banking (HUB), Vietnam. 

 Compliance with ethical standards

 Citation:

Linh CD (2026). Earnings quality of Vietnamese banks: A nonlinear perspective with generalized additive models. International Journal of Advanced and Applied Sciences, 13(5): 268-282

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