Internal audit quality and financial reporting transparency in Vietnam: The roles of ethics, governance, and digital capability (PLS-SEM)

This study investigates how organizational culture, structure, and infrastructure jointly shape financial reporting transparency (FRT) in Vietnam. Drawing on agency, stakeholder, ethical leadership, and institutional perspectives, it examines the effects of corporate governance quality (CGQ), business ethics (BE), and digital transformation capability (DTC) on FRT, both directly and indirectly through internal audit quality (IAQ). A quantitative, cross-sectional survey was conducted with 387 internal stakeholders-including internal auditors, CFOs, chief accountants, and board/audit-committee members-across Vietnamese enterprises with established internal audit functions and digital reporting systems. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to analyze the data. The proposed model explains 59.4% of the variance in IAQ and 50.6% of the variance in FRT. All hypothesized paths are positive and significant. BE exerts the strongest effect on IAQ, followed by CGQ and DTC. IAQ significantly improves FRT, and direct effects of CGQ, BE, and DTC on FRT persist, indicating partial mediation. Effect size analysis further shows that ethical culture is the primary driver of IAQ, while transparency is shaped by multiple moderate influences. These findings make several contributions. Conceptually, they integrate cultural (BE), structural (CGQ), and infrastructural (DTC) factors within a single explanatory framework for transparency. Empirically, they provide Vietnam-specific evidence on how IAQ mediates these effects in an emerging market context. Practically, the results underscore that transparency is most effectively achieved when firms align ethics, governance, and digitalization with a high-quality internal audit function. The study offers actionable insights for boards, audit committees, regulators, and policymakers aiming to strengthen corporate accountability and disclosure credibility in emerging economies.