Drawing on pecking-order theory and agency theory, this study investigates whether financial leverage is affected by financial reporting quality. Financial reporting quality is measured by employing the outcome of the Vietnam Annual Report Awards and earnings quality. I find that firms with higher reporting quality have a lower degree of information asymmetry and lower debt ratios, consistent with pecking-order theory and agency theory. The results also indicate that two aspects of reporting quality, qualitative characteristics and earnings quality, are not substitutes but complementary in explaining the debt ratio. In addition, I find that qualitative characteristics play a more significant role in reducing information asymmetry than earnings quality.