Applicability of ifrs in Viet Nam stock exchange listed companies: Perspective from theory of planned behavior

Nguyen Thi Ngoc Diep. Ho Chi Minh City Open University Journal of Science, 11(1), 109-121 109 
Applicability of IFRS in Vietnam stock exchange listed companies: 
Perspective from Theory of Planned Behavior 
Nguyen Thi Ngoc Diep1* 
1Ho Chi Minh City Open University, Vietnam 
*Corresponding author: diep.ntn@ou.edu.vn 
ARTICLE INFO ABSTRACT 
DOI:10.46223/HCMCOUJS.
econ.en.11.1.1237.2021 
Received: October 27th, 2020 
Revised: January 6th, 2021 
Accepted: January 18th, 2021 
Keywords: 
IFRS, ability of IFRS 
adoption 
The research, based upon data collected from 273 enterprises, 
uses the Theory of Planned Behavior (TPB) to identify and estimate 
the degree to which factors the ability to apply IFRS in listed non-
financial enterprises has been affected. Through Exploratory Factor 
Analysis (EFA) and multivariate linear regression approach, the 
research proves that there are four factors placing impacts on IFRS 
adoption in listed companies in Vietnam. Those are management’s 
attitude, costs, economic integration, accounting staff’s knowledge 
and skills. The research results are the foundation for businesses to 
be fully prepared for the favorable and successful application of 
IFRS. In addition, the results of this study are also useful references 
for policy-making agencies and professional associations in 
promoting IFRS application in Vietnam the next time. 
1. Introduction 
International accounting integration is always a challenging process (Christopher & Parker, 
2016). The implementation of IFRS (International Financial Reporting Standards) in Vietnam has 
been constrained due to economic, educational, political and legal conditions (Tran, 2016). 
Furthermore, the IFRS are basically built on Anglo - Saxon model (Anglo-Saxon model of 
corporate governance) and are principle-based, and as a consequence, the standards are, culturally 
and practically, not easily adapted in Vietnam. The project on application of financial reporting 
standards in Vietnam (Decision No. 345/QD-BTC on March 16, 2020 - Ministry of Finance) 
confirms the determination to apply these standards in financial reporting in Vietnam. The main 
business entities which are considered to have the abilities and conditions and to be encouraged to 
apply IFRS voluntarily in the period of 2022 to 2025 are listed companies. Can those companies 
apply IFRS? To what degree should they be involved? 
2. Theoretical and hypothetical basis 
2.1. Theory of Planned Behavior - TPB 
The Theory of Planned Behavior (Ajzen, 1991) supposes that any behavior is affected 
directly by behavioral intentions. The more salient the intentions are the more possibility for 
according behaviors we have. 
The main purpose of TPB is to explain human behaviors, not for predictions only, so 
according to the TPB, behavioral intentions are determined by three factors: attitude toward the 
behavior, subjective norm concerning the behavior, and perceived behavioral control. Attitude 
toward the behavior is assumed to be a function of readily accessible beliefs regarding the 
 110 Nguyen Thi Ngoc Diep. Ho Chi Minh City Open University Journal of Science, 11(1), 109-121 
behavior's likely consequences, termed behavioral beliefs; the subjective norm is the expectation 
or subjective probability that a given referent individual or group (e.g., friends, family, spouse, 
coworkers, one's physician or supervisor) approves or disapproves of performing the behavior 
under consideration; perceived behavioral control is concerned with the presence of factors that 
can facilitate or impede the performance of the behavior, this is the factor that encourages or 
discourages the behavior. 
Figure 1. The Theory of Planned Behavior (Ajzen, 1991) 
2.2. Research model 
Based on the results of the research of Djatej, Zhou, Gorton, and McGonigle (2012) and 
Simegn (2015), as well as the qualitative research by interviewing experts, the authors generalize 
the factors affecting the possibility to apply IFRS in listed companies as follows. 
Manager attitudes: Rogers (2010) assumed that the pioneers in innovation are the agents of 
change in any organization. Therefore, the change in attitudes of those agents is essential for applying 
changes. In his research on manager attitudes in India and Australia, Bhattacharyya (2014) found that 
manager attitudes positively affect the decisions in reporting sustainable development. Manager 
attitudes also play an important role in providing better conditions for applying IFRS in organizations 
(Bananuka, Kadaali, Mukyala, Muramuzi, & Namusobya, 2019). As a consequence, the hypothesis is: 
H1: Manager attitudes and the possibility to apply IFRS have a relationship in the same 
direction 
Costs: Tyrrall, Woodward, and Rakhimbekova (2007) proves that only 54% of the 
interviewed and questioned people think that adopting IFRS in Kazakhstan is a costly process. All 
the questioned people po ... ts 
(Group B) 
IFRS is only 
applied 
completely 
in parent 
companies 
(or 
subsidiaries) 
and IFRS 
transitions to 
be made 
when 
preparing 
consolidated 
financial 
statements in 
corporations 
(Group C) 
IFRS are 
applied 
completely 
in parent 
companies 
and all 
subsidiarie 
(Group D) 
Number 
of 
enterprises 
19 254 140 133 49 29 60 135 273 
Ratio (%) 7% 93% 51% 49% 18% 11% 22% 49% 100% 
Source: Summarized from data surveyed 
In 273 samples, there are 93% of companies that have never applied IFRS and 7% have 
already applied. We can see that the number of listed non-financial companies applying IFRS is 
quite low. As for the intention to be listed in foreign stock markets, 51% of enterprises are positive 
and 49% negative. Considered under the level of IFRS application, we summarized from surveyed 
data to divide the enterprises into 4 groups with 4 levels of applying IFRS as shown in Table 1, 
the results are Group A: 18%; Group B: 11%; Group C: 22% and Group D has the highest 
proportion of 49%. The results show that IFRS are applied completely in parent companies and all 
subsidiaries have the highest percentage. 
4.2. Scale reliability (internal validation of measurement scales) 
As Table 4 shows, most of the factors have Cronbach’s Alpha indicators which are more 
than 0.6; corrected item-total correlation of the scales is higher than 0.3. After extracting 3 observed 
variants including C4 (qualified - accountant for IFRS recruitment is difficult), AA5 (accountants’ 
ability) (many accountants are reluctant to adopt IFRS) and P5 (enterprises are hesitant because 
IFRS are principle-based), the 21 observed variants left are validated and used for EFA. 
 116 Nguyen Thi Ngoc Diep. Ho Chi Minh City Open University Journal of Science, 11(1), 109-121 
Table 4 
Cronbach’s Alpha indicators 
Scale 
Number of variants 
Cronbach’s Alpha 
Minimum corrected item-total 
correlation Before After 
Manager attitudes (MA) 4 4 .812 .613 
Cost (C) 5 4 .861 .667 
Economic integration (EI) 5 5 .889 .697 
Ability of accountants 
(AA) 
5 4 
.801 .558 
Possibility to apply IFRS 
(P) 
5 4 
.874 .672 
Source: Data analysis result of the research with SPSS 22.0 
Using EFA with the Principle Component Analysis extraction method and orthogonal 
rotation (Varimax), the analysis includes 17 observed variants of EFA shown in Table 3, with the 
KMO test for sampling at 0.856, Barlett’s Test returns the Sig = 0.000; the factors extracted are 4, 
thus all are compliant with the theoretical model we built. Cumulative variance is 70.316%, and 
the total variance explained by each component is always bigger than 0.5. So, EFA is suitable for 
data and observed variables that have a correlation in the population and is used for the next 
analysis. 
Table 5 
Independent variable EFA 
Rotated Component Matrixa 
Component 
1 2 3 4 
EI5 .832 
EI1 .828 
EI3 .785 
EI2 .774 
C2 .825 
C1 .825 
C3 .762 
C5 .735 
P3 .795 
P2 .783 
P1 .766 
P4 .755 
AA3 .866 
AA2 .815 
AA1 .793 
Extraction Method: Principal Component Analysis 
 Rotation Method: Varimax with Kaiser Normalization 
a. Rotation converged in 5 iterations. 
Source: Data analysis result of the research with SPSS 22.0 
Nguyen Thi Ngoc Diep. Ho Chi Minh City Open University Journal of Science, 11(1), 109-121 117 
4.3. Correlation test 
Table 6 shows the correlation coefficients of variables, the aim of this correlation analysis 
is to check the correlation of independent and independent variables to take out the components 
that may lead to multicollinearity before regression analysis. All the independent variables have 
Sig < 5%, so they are all have correlations with the dependent variables. The coefficients of the 4 
factors are: MA: 0.045, C: 0.732, EI: 0.518, AA: 0.396. The coefficients of independent variables 
in the model do not exceed 0.8, so in the regression model, there will be little chance for 
multicollinearity to take place. This proves that dependent variables have linear correlations with 
the 4 factors, and they have a normal distribution. 
Table 6 
Correlation matrix 
Correlations 
 P MA C EI AA 
P Pearson 
Correlation 
1 .406** -.732** .518** .396** 
Sig. (2-tailed) .000 .000 .000 .000 
N 273 273 273 273 
MA Pearson 
Correlation 
 1 -.408** .318** .236** 
Sig. (2-tailed) .000 .000 .000 
N 273 273 273 
C Pearson 
Correlation 
 1 -.514** -.296** 
Sig. (2-tailed) .000 .000 
N 273 273 
EI Pearson 
Correlation 
 1 .292** 
Sig. (2-tailed) .000 
N 273 
AA Pearson 
Correlation 
 1 
Sig. (2-tailed) 
N 
**. Correlation is significant at the 0.01 level (2-tailed) 
Source: Data analysis result of the research with SPSS 22.0 
4.4. Multivariate linear regression analysis 
To identify, measure and evaluate the possibility to apply IFRS in Vietnam Stock Market 
listed companies, the author use a multivariate linear regression method with 4 factors extracted 
from the EFA mentioned above. 
 118 Nguyen Thi Ngoc Diep. Ho Chi Minh City Open University Journal of Science, 11(1), 109-121 
Table 7 
Multivariate linear regression analysis results 
Unstandardized 
Coefficients 
Standardized 
coefficients 
t Sig Collinearity Statistics 
Beta 
Standard 
deviation 
Beta Tolerance VIF 
Constant 3.424 .290 11.805 .000 
MA .099 .049 .087 2.007 .046 .807 1.239 
C -.417 .035 -.572 -11.935 .000 .656 1.524 
EI .114 .036 .148 3.204 .002 .704 1.420 
AA .146 .037 .163 3.913 .000 .875 1.143 
R2 0.595 
Adjusted R2 0.589 
Sig. F Change 0.000 
Durbin-Watson 2.090 
Source: Data analysis result of the research with SPSS 22.0 
Table 5 shows that R2 = 0,595; the value of R2 demonstrates that the independent variables 
used in the model can explain 59.5% of the change independent variables, the 40.5% left are the 
factors left out. The results also let us know that VIF (variance inflation factor) is very small, all 
of them are less than 2, so multicollinearity does not occur. For the independence of residuals test, 
the Durbin-Watson statistics is 2.090 < 3, showing that there is no serial autocorrelation, or the 
estimated residuals of the independent model have no linear correlation. The t value in accordance 
with Sig. of independent variables are all less than 0.05, so they have no statistical meaning. Table 
6 shows that all the 4 observed variables affect the possibility to apply IFRS. Three of them, having 
relationships in the same direction, are: manager attitudes, economic integration, accountants’ 
ability and the other one is cost, which has an opposite direction. The standardized regression 
coefficient equation is as follows: 
Y = 0.099X1 - 0.417 X2 + 0.114 X3 + 0.146 X4 + 3.424 (1) 
Where: 
 Y: possibility to apply IFRS in Vietnam Stock Market listed companies 
 X1: manager attitudes 
 X2: costs 
 X3: economic integration 
 X4: accountants’ ability 
Table 8 
Summary of the factorial impact in the possibility to apply IFRS 
No Factor Value Percentage 
1 MA: Manager attitudes 0.099 12.76% 
2 C: Costs 0.417 53.74% 
3 EI: Economic integration 0.114 14.69% 
4 AA: Accountants’ ability 0.146 18.81% 
 0.776 100% 
Source: Data analysis result of the research with SPSS 22.0 
Nguyen Thi Ngoc Diep. Ho Chi Minh City Open University Journal of Science, 11(1), 109-121 119 
In Table 8, among the influencing factors, the cost has the strongest effect and the opposite 
direction on the ability to apply IFRS, specifically: C: cost, takes 53.74%; second: Accountants’ 
ability, takes 18.81%, third comes economic integration factor, takes 14.69% to the possibility to 
apply IFRS and last comes manager attitude factor, with 12.76%. 
5. Conclusion 
5.1. Conclusion 
The article analyzes and identifies 3 positive factors and one negative that place impacts 
on the possibility of applying IFRS in non-financial enterprises listed in the Vietnam Stock Market. 
They are manager attitudes, costs, economic integration and accountants’ ability. With this paper, 
the author hope to help administrators and policy planners have more specific concepts about the 
above issues and have better solutions in the coming time, giving better conditions for enterprises 
to apply IFRS more swiftly and successfully. 
5.2. Policy implication 
Costs, the factor that places the most important impact on the possibility of the application 
of IFRS, can be easily identified. The higher the initial cost of investment, the bigger the obstacles 
for enterprises to adapt to IFRS implementation. To cut costs for companies, experts from 
professional organizations must be involved, they can give good help on IFRS implementation, 
ensuring the “do right the first time” for enterprises in meeting IFRS requirements. 
Furthermore, accountants’ knowledge of IFRS is another factor determining the success of 
IFRS application. If the knowledge in IFRS is widely updated among those staff, the IFRS 
implementation will no more give difficulties for enterprises. 
Additionally, the economic integration also pushes the possibility to apply IFRS. Graceful 
governmental policies to encourage international business activities also give benefits to the 
implementation of IFRS in Vietnamese enterprises. 
Lastly, the manager's attitude should be changed and updated towards IFRS adaptation. 
The more positive the attitude they have, the better chance for IFRS to be applied. So, it is 
important for policymakers to make business managers understand their benefits and 
responsibilities in IFRS implementation. 
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