Corporate Governance and Audit Report Lag in Non-Financial Companies on the Indonesia Stock Exchange
Abstract
Purpose– This study aims to examine the effect of corporate governance on audit report lag. Corporate governance is proxied by the variable board of directors size, independent board of commissioners, female board of directors, external auditor reputation (Big 4), and audit committee size. The sample of this research is manufacturing companies that are listed consecutively on the Indonesia Stock Exchange during the period 2014 to 2020.
Design/Methodology– The results of data collection indicate that the sample that meets the criteria is 86 firm-years, or 602 observations. The data analysis method used panel data regression.
Results– The results showed that the board of directors size, Big 4, and audit committee size had a negative effect on the Audit Report Lag (ARL). Furthermore, the independent board of commissioners has a positive effect on ARL, while the female board of directors has no effect on the Audit Report Lag (ARL).
Contribution– This research contributes to the development of corporate governance theory in relation to audit report lag. The results of this study can add insight and direction to reduce audit report lag for regulators, management, and investors on the Indonesia Stock Exchange, especially for manufacturing companies.
Keywords
Full Text:
PDFReferences
Afify, H. A. E. (2009). Determinants of audit report lag: Does implementing corporate governance have any impact? Empirical evidence from Egypt. Journal of Applied Accounting Research, 10(1), 56–86. https://doi.org/10.1108/09675420910963397
Agyei-Mensah, B. K. (2018). Impact of corporate governance attributes and financial reporting lag on corporate financial performance. African Journal of Economic and Management Studies, 9(3), 349–366. https://doi.org/10.1108/AJEMS-08-2017-0205
Al-Ajmi, J. (2008). Audit and reporting delays: Evidence from an emerging market. Advances in Accounting, 24(2), 217–226. https://doi.org/10.1016/j.adiac.2008.08.002
Al-Mulla, M., & Bradbury, M. E. (2020). The demand and supply timely financial reports. Pacific Accounting Review, 32(3), 335–353. https://doi.org/10.1108/PAR-10-2018-0076
Alfraih, M. M. (2016). Corporate governance mechanisms and audit delay in a joint audit regulation. Journal of Financial Regulation and Compliance, 24(3), 292–316. https://doi.org/10.1108/JFRC-09-2015-0054
Arora, A., & Sharma, C. (2016). Corporate governance and firm performance in developing countries: evidence from India. Corporate Governance (Bingley), 16(2), 420–436. https://doi.org/10.1108/CG-01-2016-0018
Ashton, R. H., Graul, P. R., & Newton, J. D. (1989). Audit delay and the timeliness of corporate reporting. Contemporary Accounting Research, 5(2), 657–673. https://doi.org/10.1111/j.1911-3846.1989.tb00732.x
Becker, C. L., Defond, M. L., Jiambalvo, J., & Subramanyam, K. R. (1998). The effect of audit quality on earnings management. Contemporary Accounting Research, 15(1), 1–24. https://doi.org/10.1111/j.1911-3846.1998.tb00547.x
Cabedo, J. D., & Tirado, J. M. (2004). The disclosure of risk in financial statements. Accounting Forum, 28(2), 181–200. https://doi.org/10.1016/j.accfor.2003.10.002
Caneghem, T. Van. (2004). The impact of audit quality on earnings rounding-up behaviour: some UK evidence. European Accounting Review, 13(4), 771–786. https://doi.org/10.1080/0963818042000216866
Chalu, H. (2021). Board characteristics, auditing characteristics and audit report lag in African Central Banks. Journal of Accounting in Emerging Economies, 11(4), 578–609. https://doi.org/10.1108/JAEE-09-2019-0173
Chan, K. H., Luo, V. W., & Mo, P. L. L. (2016). Determinants and implications of long audit reporting lags: Evidence from China. Accounting and Business Research, 46(2), 145–166. https://doi.org/10.1080/00014788.2015.1039475
Cohen, J., Krishnamoorthy, G., & Wright, A. M. (2002). Corporate Governance and the Audit Process. Contemporary Accounting Research, 19(4), 573–594. https://doi.org/10.1506/983M-EPXG-4Y0R-J9YK
Cohen, S., & Leventis, S. (2013). Effects of municipal, auditing and political factors on audit delay. Accounting Forum, 37(1), 40–53. https://doi.org/10.1016/j.accfor.2012.04.002
Darko, J., Aribi, Z. A., & Uzonwanne, G. C. (2016). Corporate governance: the impact of director and board structure, ownership structure and corporate control on the performance of listed companies on the Ghana stock exchange. Corporate Governance (Bingley), 16(2), 259–277. https://doi.org/10.1108/CG-11-2014-0133
DeZoort, F. T., Hermanson, D. R., & Archambeault, D. S. (2002). Audit committee effectiveness: A synthesis of the audit committee literature. Corporate Board: Role, Duties and Composition, 21(1), 38–75. https://doi.org/10.22495/cbv8i1art2
Durand, G. (2019). The determinants of audit report lag: a meta-analysis. Managerial Auditing Journal, 34(1), 44–75.
Elzahar, H., & Hussainey, K. (2012). Determinants of narrative risk disclosures in UK interim reports. Journal of Risk Finance, 13(2), 133–147. https://doi.org/10.1108/15265941211203189
Ezat, A., & El-Masry, A. (2008). The impact of corporate governance on the timeliness of corporate internet reporting by Egyptian listed companies. Managerial Finance, 34(12), 848–867. https://doi.org/10.1108/03074350810915815
Fama, E. F., & Jensen, M. C. (1983). Separation of Ownership and Control Separation of Ownership and Control. Journal of Law and Economics, 26(2), 301–325.
Habib, A., Bhuiyan, M. B. U., Huang, H. J., & Miah, M. S. (2019). Determinants of audit report lag: A meta-analysis. International Journal of Auditing, 23(1), 20–44. https://doi.org/10.1111/ijau.12136
Habib, A., & Muhammadi, A. H. (2018). Political connections and audit report lag: Indonesian evidence", International Journal of Accounting & Information Management,. International Journal of Accounting & Information Management, 19(3), 120–124.
Hassan, Y. M. (2016). Determinants of audit report lag: evidence from Palestine. Journal of Accounting in Emerging Economies, 6(1), 13–32. https://doi.org/10.1108/jaee-05-2013-0024
Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28(3), 383–396. https://doi.org/10.5465/AMR.2003.10196729
Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). Recent research on team and organizational diversity: SWOT analysis and implications. Journal of Management, 29(6), 801–830. https://doi.org/10.1016/S0149-2063(03)00080-1
Juliardi, D., Cahyono, Y., & Suryani, P. (2021). The Characteristics Of Auditee and Audit Report Lag. Jurnal Riset Akuntansi Terpadu, 14(1), 66–75.
Kaaroud, M. A., Mohd Ariffin, N., & Ahmad, M. (2020). The extent of audit report lag and governance mechanisms: Evidence from Islamic banking institutions in Malaysia. Journal of Islamic Accounting and Business Research, 11(1), 70–89. https://doi.org/10.1108/JIABR-05-2017-0069
Kiel, G. C., & Nicholson, G. J. (2003). Board composition and corporate performance: How the Australian experience informs contrasting theories of corporate governance. Corporate Governance: An International Review, 11(3), 189–205. https://doi.org/10.1111/1467-8683.00318
Leventis, S., Weetman, P., & Caramanis, C. (2005). Determinants of Audit Report Lag: Some Evidence from the Athens Stock Exchange. International Journal of Auditing, 9(1), 45–58. https://doi.org/10.1111/j.1099-1123.2005.00101.x
Lipton, M., & Lorsch, J. W. (1992). A modest proposal for improved corporate governance: Business source. Business Lawyer, 42(1), 59–78. http://web.a.ebscohost.com.eserv.uum.edu.my/bsi/detail?vid=19&sid=e3a1315c-d940-4744-b224-1ce498b43ead@sessionmgr4005&hid=4114&bdata=JnNpdGU9YnNpLWxpdmU=#db=bth&AN=5963897
Lückerath-Rovers, M. (2013). Women on boards and firm performance. Journal of Management and Governance, 17(2), 491–509. https://doi.org/10.1007/s10997-011-9186-1
Lybek, T., & Morris, J. (2004). Central Bank Governance: A Survey of Boards and Management. IMF Working Papers, 04(226), 1–52. https://doi.org/10.5089/9781451875416.001
Mathuva, D. M., Tauringana, V., & Owino, F. J. O. (2019). Corporate governance and the timeliness of audited financial statements: The case of Kenyan listed firms. Journal of Accounting in Emerging Economies, 9(4), 473–501. https://doi.org/10.1108/JAEE-05-2018-0053
Nelson, S. P., & Shukeri, S. N. (2011). Corporate governance and audit report timeliness: Evidence from Malaysia. In Research in Accounting in Emerging Economies (Vol. 11, Issue 1). Emerald Group Publishing Ltd. https://doi.org/10.1108/S1479-3563(2011)0000011010
Oussii, A. A., & Boulila Taktak, N. (2018). Audit committee effectiveness and financial reporting timeliness: The case of Tunisian listed companies. African Journal of Economic and Management Studies, 9(1), 34–55. https://doi.org/10.1108/AJEMS-11-2016-0163
Pfeffer, J., & Salancik, G. R. (2003). The external Control of Organisations: A Resource Dependence Perspective (Classic Edition). In Stanford University Press, Stanford, CA. https://doi.org/10.1108/CG-09-2016-0174
Richard, O. C., Barnett, T., Dwyer, S., & Chadwick, K. (2004). Cultural diversity in management, firm performance, and the moderating role of entrepreneurial orientation dimensions. Academy of Management Journal, 47(2), 255–266. https://doi.org/10.2307/20159576
Rusmin, R., & Evans, J. (2017). Audit quality and audit report lag: Case of Indonesian listed companies. Asian Review of Accounting, 25(2), 191–210.
Samaha, K., & Dahawy, K. (2011). An empirical analysis of corporate governance structures and voluntary corporate disclosure in volatile capital markets: The Egyptian experience. International Journal of Accounting, Auditing and Performance Evaluation, 7(1–2), 61–93. https://doi.org/10.1504/IJAAPE.2011.037726
Samaha, K., & Khlif, H. (2017). Audit-related attributes, regulatory reforms and timely disclosure. Journal of Financial Reporting and Accounting, 15(2), 158–179. https://doi.org/10.1108/jfra-08-2015-0077
Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. American Finance Association, 52(2), 737–783. https://doi.org/10.4324/9780203940136
Shofiyah, L., & Suryani, A. W. (2020). Audit Report Lag and Its Determinants. KnE Social Sciences, 3rd International Research Conference on Economics and Business, 2020(29), 202–221. https://doi.org/10.18502/kss.v4i7.6853
Singh, H., & Sultana, N. (2011). Board of director characteristics and audit report lag: Australian evidence. Corporate Board: Role, Duties and Composition, 7(3), 38–51. https://doi.org/10.22495/cbv7i3art3
Sultana, N., Singh, H., & Van der Zahn, J. L. W. M. (2015). Audit Committee Characteristics and Audit Report Lag. International Journal of Auditing, 19(2), 72–87. https://doi.org/10.1111/ijau.12033
Türel, A. G. (2010). Timeliness of Financial Reporting in Emerging Capital Markets: Evidence from Turkey. European Financial and Accounting Journal, 5(3), 113–133. https://doi.org/10.18267/j.efaj.58
Ujunwa, A. (2012). Board characteristics and the financial performance of Nigerian quoted firms. Corporate Governance (Bingley), 12(5), 656–674. https://doi.org/10.1108/14720701211275587
Vafeas, N. (1999). Board meeting frequency and firm performance. Journal of Financial Economics, 53(1), 113–142. https://doi.org/10.1016/S0304-405X(99)00018-5
Wijethilake, C., Ekanayake, A., & Perera, S. (2015). Board involvement in corporate performance: evidence from a developing country. Journal of Accounting in Emerging Economies, 5(5), 250–268.
DOI: https://doi.org/10.24815/jaroe.v5i2.23920
Article Metrics
Abstract view : 0 timesPDF - 0 times
Refbacks
- There are currently no refbacks.
Published by:
Accounting Department
Economics and Business Faculty
Syiah Kuala University
Kopelma Darussalam, Banda Aceh, Indonesia - 23111
E-ISSN: 2621-1041
Journal of Accounting Research, Organization and Economics by Accounting Department of Economics and Business Faculty of Syiah Kuala University is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at http://www.jurnal.unsyiah.ac.id/JAROE/index.