The relationship between level of environmental financial accounting practices and financial performance in Vietnam

ncial accounting information disclosed. 
The relationship between the level of environmental financial accounting practices and financial performance of the following year 
To examine the relationship between the level of environmental financial accounting practices and financial performance of the 
following years, we perform a multivariate regression analysis with dependent variables of ROA and TBQ. The results of the 
regression analysis are presented in Table 8. Similarly, we also conduct Breusch-Pagan Lagrange test; Hausman test; and F_test, 
to choose the most suitable model to measure this relationship. The test results indicate that in the case of ROA as a dependent 
variable, the OLS model is best suited; in the case of TBQ as the dependent variable, the FEM model is sub-merged with the 
significance level of 5%. 
Table 8 
Regression results – the case with the latency factor 
 ROA TBQ 
OLS FEM REM OLS FEM REM 
EFCPt-1 0.539 
(.0210) 
0.330 
(.0121) 
0.837 
(.0147) 
0.171 
(.0149) 
0.172 
(.00218) 
0.228 
(.0412) 
SIZE -0.627 (.1653) 
-0.118 
(.0186) 
0.756 
(.0210) 
0.218 
(.0197) 
-0.319 
(.0137) 
0.626 
(.0147) 
LEV -0.173 (.0021) 
0.079 
(.0173) 
-0.421 
(.0339) 
-0.168 
(.0539) 
0.180 
(.0182) 
-0.183 
(.0157) 
AGE 0.152 (.0169) 
0.067 
(.0032) 
0.176 
(.0183) 
0.569 
(.0121) 
0.269 
(.0057) 
0.267 
(.0031) 
AUD 0.186 (.0046) 
0.276 
(.0021) 
0.353 
(.0074) 
0.369 
(.0031) 
0.330 
(.0084) 
0.167 
(.0043) 
CF 0.128 (.0031) 
0.049 
(.0142) 
0.459 
(.0342) 
0.179 
(.0520) 
0.183 
(.0171) 
-0.159 
(.0129) 
MV -0.159 (.0019) 
0.069 
(.0154) 
-0.439 
(.0328) 
-0.170 
(.0528) 
-0.173 
(.0165) 
-0.179 
(.0146) 
Number of Obs 139 139 139 139 139 139 
Constant 0.128 0.161 0.248 0.371 0.430 0.338 
Adj R – squares 0.4198 0.3210 0.3103 0.4210 0.4520 0.4162 
The results in Table 8 show that Sig. = 0.0210 and Sig. = 0.0218 to <0.5, there is a relationship between the level of 
environmental financial accounting practices and financial performance of the following year. As a result, the level of 
environmental financial accounting practices by listed firms influences financial performance according to the accounting and 
market of the following year. This result is consistent with studies (Isanzu & Fengju, 2016; Nelling & Webb, 2009; Ho et al., 
2017). This shows that the clearer, more detailed and transparent disclosure of environmental accounting information is more 
conducive to the future financial performance of the business. 
The financial effect between listed firms disclosed environmental financial accounting practices and listed firms did not disclose 
This study examined the differences in financial performance between the two groups of firms, i.e. the group disclosed 
environmental financial accounting practices and the group did not. The results are presented in Table 9, showing financial 
performance of each group and the results of the t-test. 
Table 9 
Group financial performance and Bartlett’s test for equal variances 
 Group No Mean Std.Dev Std.Err 
ROA EFCP 105 0.08745 0.09675 0.00645 Non –EFCP 105 0.06834 0.42317 0.02341 
TBQ EFCP 105 1.08466 0.86751 0.06123 Non – EFCP 105 1.15328 2.01762 0.12657 
Table 10 
The ANOVA and Bartlett’s test 
F Prob>F SS df MS 
Bartlett’s test 
χ2 Prob 
ROA 2.59 0.0000 2.317 243 0.009 89.3856 0.001 
TBQ 0.41 1.0000 1089.432 243 4.328 412.6549 0.000 
L. S. Nguyen et al. /Accounting 6 (2020) 627
(i) if we use ROA: The mean value for group of listed firms disclosing environmental financial accounting practice (0.087) is 
higher than for firms not disclosing environmental financial accounting practice (0.068). At the same time, t-test results show 
that p-value = 0.000 <0.05. Thus, the hypothesis H0 is rejected and accepts the alternative hypothesis. This means that there is 
a statistically significant difference in ROA between listed firms disclosing environmental financial accounting practice and 
listed firms not disclosing. 
(ii) If we use TBQ: The mean value for group of listed firms disclosing environmental financial accounting practice (1.084) is 
lower than for firms not disclosing environmental financial accounting practice (1,153). At the same time, t-test results show 
that p-value = 1.000> 0.05. Thus, the null hypothesis is accepted, meaning that there is no statistically significant difference in 
TBQ between listed firms disclosing environmental financial accounting practice and listed firms did not disclose. 
Thus, when listed firms disclose environmental financial accounting practice in a detailed and transparent manner, it enhances 
the image, increases the value of the brand, promotes morale of employees, increases productivity, resulting in reduced 
transaction costs to obtain external funding. 
6. Conclusion and recommendations 
The findings have shown that there exists a relationship between the level of environmental financial accounting practices and 
financial performance of listed firms on Vietnam Stock Exchange. This result is similar to previous studies (Ho et al., 2017). In 
this study, there have been new points in comparison with prior studies as this study examined the impact of the level of 
environmental financial accounting practices on financial performance not only in the current year, but the following year. As 
a result, the level of environmental financial accounting practices in the current year is not only meaningful in improving 
financial performance of that year but also helps to improve the financial performance of the following year. In addition, this 
research examined and compared the financial performance of two groups of firms disclosing and not disclosing environmental 
accounting, the results show that there is a difference relative to financial performance between two groups and the mean of 
group 1 is higher than the mean of group 2. The results again confirm the benefits and implications of implementing 
environmental accounting. In other words, in the current context, the environmental financial accounting practices will help 
listed firms improve the financial performance. The higher the level of environmental financial accounting practices, the higher 
the corporate financial performance. From the findings, we propose some recommendations to Vietnam listed firms as below: 
First, the need to raise awareness of corporate environmental responsibility and the benefits of disclosing detailed environmental 
accounting information to the financial performance. Some businesses say that if they focus on environmental protection 
activities, transparency of environmental accounting information is costly, reducing profits, it is a misconception. The empirical 
results of this study showed that the level of disclosure of environmental accounting information influences financial 
performance both in present year and the following year. Therefore, the disclosure of environmental accounting information is 
not only to be complied with environmental law, avoided legal complications but also improved the image and increased firm 
financial performance. 
Second, in the Vietnamese context and in emerging context as well, the reporting of primary environmental accounting 
information is still voluntary and free of any general pattern, with only large firms reporting responsibility. The number of firms 
reporting social responsibility is very low. The results of this study are the basis for encouraging firms to change views when 
making annual reports as well as the content of disclosure in their annual reports should not be too focused on the indicators. 
Financial results achieved during the year that ignored the environmental performance achieved. Because, together with the 
trend of green development of the world, investors are more interested in the information related to the implementation of 
corporate social responsibility. Consequently, with the implementation of environmental responsibility, the disclosure of this 
information to investors is also a way to attract their attention. 
Third, the results also show that, in addition to the level of disclosure of environmental accounting information, other 
determinants such as firm size, financial leverage, listing period, independent auditing also influence firm financial performance. 
Therefore, in order to achieve financial performance in the period, listed firms should consider, coordinate and pay attention to 
many factors in order to achieve the best economic growth while ensuring economic growth, sustainable development and image 
of firms in the market. 
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