Audit committee chair accounting expertise and audit report timeliness

Abstract

Purpose The purpose of this paper is to investigate whether the characteristics of the audit committee (AC) chair affect audit report timeliness. In particular, the direct association between AC chair accounting expertise and audit report delay, and the moderating effect of other characteristics of AC chair on this association are examined. Design/methodology/approach To achieve the purpose of this study, the characteristics examined by this study are AC chair expertise, shareholding, tenure and multiple directorships. Furthermore, a sample of Malaysian companies during the period 2005–2011 and the fixed effects panel data method are utilized. Findings The results suggest that an AC chair with accounting expertise is associated with a reduction in audit delay. The reduction is more obvious when the chair holds shares in the company, but is weakened by longer tenure and multiple directorships. These results are robust after conducting several robust tests. Using mediating analysis, the authors also document that an AC chair with accounting expertise can enhance the timeliness of audit reports even when the quality of financial reporting is lower. The reported result is supported by additional analysis that finds that AC chairs with accounting expertise and AC chairs with accounting expertise and shareholding are significantly associated with shorter abnormal audit delay. Originality/value This study provides comprehensive analysis concerning the association between AC chair and audit report timeliness using a unique setting. It is among the limited evidence that reports the moderating effect of AC chair characteristics on the role of such chair on audit report timeliness.

Risk Management Functions and Audit Report Lag among Listed Saudi Manufacturing Companies

“…Firstly, the Corporate governance control variables, namely, board of directors' effectiveness (BDE) and audit committee effectiveness (ACE); secondly, the firm characteristics control variables, namely, firm size (SIZE), firm performance (ROA), leverage (LEV), and firm age (AGE). Prior studies have uncovered that those variables are associated with audit report lag (Knechel & Sharma, 2012;Dao & Pham, 2014;Hassan, 2016;Meckfessel & Sellers, 2017;Samaha & Khlif, 2017, Habib & Muhammadi, 2018Farag, 2017;Wan Hussin, Bamahros, & Shukeri,2018;Abdillah, Mardijuwono, & Habiburrochman, 2019;Mathuva, Tauringana, & Owino, 2019;Aljaaidi, Omer, & Bagulaidah, 2019;Baatwah, Salleh, & Stewart, 2019;Chae, Nakano, & Fujitani, 2020;Ha, & Nguyen, 2020;.…”

“…With regard to the corporate governance control variables, we include the board of directors' effectiveness BDE (board size and meetings) and audit committee effectiveness ACE (audit committee size and meetings). Most prior archival studies have documented that the effectiveness of the corporate governance mechanisms is associated with audit report lag (DeZoort, Hermanson, & Archabeault 2002;Baatwah, Salleh, & Ahmad, 2015;Hassan, 2016;Farag, 2017;Samaha & Khlif, 2017;Oussii & Taktak, 2018;Wan Hussin et al 2018;Mathuva, et al, 2019;Aljaaidi et al, 2019;Baatwah et al, 2019;Abdillah, Mardijuwono, & Habiburrochman, 2019;Dang, Pham, Nguyen, & Nguyen,2020). With regard to the firm-specific control variables, prior studies have documented that the company size (SIZE), company performance (ROA), leverage (LEV), and company age (AGE) are significantly associated with audit report lag.…”

Audit Committee Chair Attributes and Audit Report Lag in an Emerging Market

“…Malaysian-listed companies have four months to produce their audited financials (published in an annual report) rather than the standard three months in other markets" (CLSA and ACGA, 2016). Furthermore, prior studies have shown that in Malaysia, the average ARL is 100 days as opposed to an average of between a minimum of 40 days to a maximum of 80 days in other developed and developing nations (Baatwah, Salleh, & Stewart, 2019;Mohamad-Nor, Shafie, & Wan-Hussin, 2010;Wan-Hussin, Bamahros, & Shukeri, 2018). Therefore, improvements in ARL can pose a notable impact on the timeliness of the audited financial reports (Dong, Robinson, & Xu, 2018), thereby leading to their enhanced timeliness in issuance.…”

“…However, merely a small number of published works in Malaysia have empirically looked into the role of the ACC on ARL. In Malaysia, Baatwah et al (2019) are the only researchers who have explored the association between the ACC who has the accounting expertise and ARL. Regardless, the current work is essentially an extension of Baatwah et al (2019), but with some differences.…”

“…In Malaysia, Baatwah et al (2019) are the only researchers who have explored the association between the ACC who has the accounting expertise and ARL. Regardless, the current work is essentially an extension of Baatwah et al (2019), but with some differences. Baatwah et al (2019) utilised the top 100 listed companies in 2011, which might earn some worry about their findings' generalisation to the smaller companies listed on Bursa Malaysia.…”