The characteristics of the audit committee affecting timeliness of the audit report in Indonesia

Abstract

This paper aims to examine the positive relationship between the audit committee (AC) and the reporting quality proxied by the reporting timeliness in the Indonesian context. The AC effectiveness is measured by the committee size, number of its expertise or competence, and its meeting frequency. This study employs 240 observations from 48 manufacturing companies from 2014 to 2019 in the Indonesian Stock Exchange (IDX) as samples. A logit regression analysis is used to test the hypotheses in this study. The findings reveal that the AC size and financial expertise are not significantly associated with the audit report timeliness, whereas the meeting frequency has a significant effect on it. The results indicate that the AC effectiveness depends on the occurrence of communication between members. The more frequent the AC meets, the more effective their communication will be. This study findings also suggest that the number of the AC meetings is crucial in ensuring its oversight roles in companies, leading to timely submission of audited financial statements. The findings provide significant contributions to the existing literature on corporate governance (CG), especially the AC effectiveness in emerging economies. This study fills research gaps on the AC effectiveness and

Corporate governance and earnings quality: the behavioral theory of corporate governance (evidence from Iran)

“…Mathuva et al (2019) find that the composite CG has a positive influence on the timeliness of annual reports of Kenyan firms. Syofyan et al (2021) show that the audit committee size and financial expertise are not significantly associated with the audit report timeliness of Indonesian firms, whereas the meeting frequency has a significant effect on it.…”

“…Table 7 provides the results of t -tests comparing the mean and median level of each earnings quality measure for the strong and weak CG portfolios. The results show that earnings smoothness is more in firms with worse governance (Cornett et al , 2008; Wang, 2014; Yasser and Mamun, 2015; Wan Mohammad et al , 2016; Elghuweel et al , 2017; Al-Haddad and Whittington, 2019); earnings predictability is more in firms with better governance (Cho and Rui, 2009; Prencipe and Bar-Yosef, 2011; Ahmed and Ismail, 2013; Mollah et al , 2019); firms with better governance have higher earnings persistence (Calegari and Maretno, 2005; García Lara et al , 2010; Asogwa et al , 2020; Agustina et al , 2021); firms with worse governance have higher value relevance (Omokhudu and Amake, 2018); earnings timeliness is more in firms with better governance (Broedel Lopes and Walker, 2008; Ebimobowei and Yadirichukwu, 2013; Lim et al , 2014; Mathuva et al , 2019; Syofyan et al , 2021); and firms with better governance have higher levels of earnings conservatism (Xia and Zhu, 2009; García Lara et al , 2010; Lim, 2011; Leventis et al , 2013; Huang et al , 2014; Sharma and Kaur, 2021). Except the value relevance measure, these results support our hypotheses.…”

“…These firms have earnings that are more predictable, more persistent and higher levels of value relevance than their poorly governed counterparts (Calegari and Maretno, 2005; Habib and Azim, 2008; Cho and Rui, 2009; García Lara et al , 2010; Prencipe and Bar-Yosef, 2011; Ahmed and Ismail, 2013; Ogeh Fiador, 2013; Mollah et al , 2019; Almujamed and Alfraih, 2020; Asogwa et al , 2020; Omran and Tahat, 2020; Agustina et al , 2021). Also, better-governed firms have more timeliness earnings and engage in higher levels of earnings conservatism (Broedel Lopes and Walker, 2008; Xia and Zhu, 2009; García Lara et al , 2010; Lim, 2011; Leventis et al , 2013; Ebimobowei and Yadirichukwu, 2013; Lim et al , 2014; Huang et al , 2014; Mathuva et al , 2019; Syofyan et al , 2021; Sharma and Kaur, 2021). These findings are corroborated using robustness tests.…”

Komite Audit Dan Audit Report Delay: Studi Empiris Perusahaan Energi Di Indonesia

“…Ika et al (2012), Puasa, Salleh, & Ahmad (2014), Raweh et al (2019), dan Tinumbia, Djamhuri, & Subekti (2018) telah menyelidiki bahwa secara signifikan, ukuran komite audit berpengaruh terhadap audit report delay. Sebaliknya, penelitian Maranjory et al (2022), Oussii et al (2018), dan Syofyan, Septiari, Dwita, & Rahmi (2021) menyebutkan tidak ada pengaruh signifikan ukuran komite audit terhadap audit report delay. Oleh karena itu, penelitian ini meneliti kembali karakteristik ukuran komite audit.…”

Corporate Secretary Professional Expertise and Annual Report Readability

“…The definition of all expertise in this study uses a dummy variable because this study wants to see the existence of professional expertise in the corporate secretary in Indonesia. Legal expertise (LAW) is a dummy variable with a value of 1 if the corporate secretary has at least an academic law degree, has a legal license, or has worked as a lawyer or legal counsel (Syofyan et al, 2021). Accounting expertise (ACCT) is a dummy variable with a value of 1 if the corporate secretary has at least an accounting profession certification or has worked as a controller/treasurer/auditor/tax professional (Chychyla et al, 2019) or an accounting education background and 0 if not.…”