Abstract
This study examines the association between corporate governance (i.e., CEO–Chairman duality, audit committee size, audit committee independence, and audit committee meeting) and financial reporting timeliness. This research further investigates whether auditor industry specialization reduces/enhances the association between corporate governance and financial reporting timeliness. Our sample comprises of 740 companies listed in the Bursa Malaysia and focuses on the year 2014. The results show that firms with more timely reporting of financial statements are asssociated with larger audit committee, lower proportion of independent non-executive directors in audit committee, less frequent audit committee meeting; and are audited by industry specialist. More importantly, this study finds new evidence on the interaction effect of industry specialist and corporate governance variables. First, the results suggest that firm audited by industry specialist has a significantly longer audit reporting lag in firms with a dual role CEO–Chairman than firms with separate CEO–Chairman roles. Second, firms audited by industry specialist with high number of audit committee were found to take longer time to finish the audit work. Third, we find evidence showing that firms audited by industry specialist with larger audit committee took longer time to finish the audit work. Finally, this study finds that industry specialist firms enhance financial reporting timeliness in firm with more frequent audit committee meeting.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Abbott, L. J., Parker, S., & Peter, G. F. (2004). Committee characteristics and restatements. Auditing: A Journal of Practice and Theory, 23(1), 69–87.
Abdulla, J. Y. A. (1996). Timeliness of Bahraini Annual reports. Advances in International Accounting, 9, 73–88.
Abdullah, S. N. (2006). Board composition, audit committee and timeliness of corporate financial reports in Malaysia. Corporate Ownership and Control, 4(2), 33–45.
Abernathy, J. L., Beyer, B., Masli, A., & Stefaniak, C. (2014). The association between characteristics of audit committee accounting experts, audit committee chairs, and financial reporting timeliness. Advances in Accounting, 30(2), 283-297.
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.
Al Daoud, K. A., Ku Ismail, K. I., & Lode, N. A. (2015). The impact of internal corporate governance on the timeliness of financial reports of jordanian firms: Evidence using audit and management report lags, Mediterranean Journal of Social Sciences, 6(1), 430–442.
Apadore, K., & Mohd Noor, M. (2013). Determinants of audit report lag and corporate governance in Malaysia. International Journal of Business and Management, 8(15), 151–163.
Appah, E., & Emeh, Y. (2013). Corporate governance structure and timeliness of financial reports of quoted firms in Nigeria. European Journal of Business and Management, 5(32), 34–45.
Azubike, J. U. B., & Aggreh, M. (2014). Corporate governance and audit delay in Nigerian quoted companies. European Journal of Accounting Auditing and Finance Research, 2(10), 22–33.
Bedard, J., & Gendron, Y. (2010). Strengthening the financial reporting system: Can audit committees deliver? International Journal of Auditing, 14(2), 174–210.
Bradbury, M., Mak, Y. T., & Tan, S. M. (2006). Board characteristics, audit committee characteristics and abnormal accruals. Pacific Accounting Review, 18(2), 47–68.
Bursa Malaysia Corporate Governance Guide. (2013). Retrieved October 4th, 2015, from http://www.bursamalaysia.com.my.
Chen, H. L. (2014). Board capital, CEO power and R&D investment in electronics firms. Corporate Governance: An International Review, 22(5), 422–436.
Davies, M. W., & Whittred. G. P. (1980). The association between selected corporate attributes and timeliness in corporate reporting: Further analysis, Abacus, 16 (1), 48–60.
Dyer, J. D., & McHugh, A. J. (1975). The timeliness of the Australian annual report. Journal of Accounting Research, 13(2), 204–219.
Habib, A., & Bhuiyan, M. B. U. (2011). Audit firm industry specialization and the audit report lag. Journal of International Accounting, Auditing and Taxation, 20(1), 32–44.
Hashim, U. J., & Abdul Rahman, R. (2011). Audit report lag and the effectiveness of audit committee among Malaysian listed companies. International Bulletin of Business Administration, 1 0, 50–61.
Ika, S. R., & Mohd Ghazali, N. A. (2011). Audit committee effectiveness and timeliness of reporting: Indonesian evidence. Managerial Auditing Journal, 27(4), 403–424.
Kogilavani, A., & Marjan M. N. (2013). Determinants of audit report lag and corporate governance in Malaysia. International Journal of Business & Management, 8(15), 151–163.
Mohamad-Nor, M. N., Shafie, R., & Wan-Hussin, W. N. (2010). Corporate governance and audit report lag in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 6(2), 57–84.
Nahar, S. A. (2007). Board composition, audit comittee and timeliness of corporate reports in Malaysia. Corporate Ownership and Control, 4(2), 33–45.
Naimi, M. M., Shafie, R., & Wan Hussin, W. N. (2010). Corporate governance and audit report lag in Malaysia. Asian Academy of Management Journal of Accounting and Finance, 6(2), 57–84.
Nelson, S. P., & Shukeri, S. N. (2011). Corporate governance and audit report timeliness: Evidence from Malaysia. In S. Susela Devi, Keith Hooper (eds.) accounting in Asia (research in accounting in emerging economies, Vol 11), Emerald group publishing limited, (pp. 109–127).
Owusu-Ansah, S., & Leventis, S. (2006). Timeliness of corporate annual financial reporting in Greece. European Accounting Review, 15(2), 273–287.
Puasa, S., Md Salleh, M. F., & Ahmad, A. (2014). Audit committee and timeliness of financial reporting: Malaysian public listed companies. Middle-East Journal of Scientific Research, 22(2), 162–175.
Rahmat, M. M., Iskandar, T. M., & Saleh, N. M. (2009). Audit committee characteristics in financially distressed and non‐distressed companies. Managerial Auditing Journal, 24(7), 624–638.
Shukeri, S. N., & Islam, M. A. (2012). The determinants of audit timeliness: Evidence from Malaysia. Journal of Applied Science Research, 8(7), 3314–3322.
Wallace, R. S. O. (1993). Development of accounting standards for developing and newly industrialised countries. Research in Accounting in Emerging Economies, 2, 121–165.
Walker, A., & Hay, D. (2007). An empirical investigation of audit report lag: The effect of non-audit services. Working paper, University of Auckland.
Acknowledgements
We gratefully acknowledge financial support from Universiti Teknologi Mara.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 Springer Nature Singapore Pte Ltd.
About this paper
Cite this paper
Kamarudin, K.A., Wan Ismail, W.A., Yaacob, Z., Abu Bakar, S.S. (2018). Auditor Specialization and Its Influence on the Association Between Governance and the Timeliness of Financial Reporting. In: Said, R., Mohd Sidek, N., Azhar, Z., Anuar Kamarudin, K. (eds) State-of-the-Art Theories and Empirical Evidence. Springer, Singapore. https://doi.org/10.1007/978-981-10-6926-0_6
Download citation
DOI: https://doi.org/10.1007/978-981-10-6926-0_6
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-10-6924-6
Online ISBN: 978-981-10-6926-0
eBook Packages: Business and ManagementBusiness and Management (R0)