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Do covenant violations affect audit report timeliness?

Author

Listed:
  • Zane Swanson
  • Yinghong Zhang

Abstract

We investigate the impact of covenant violations on audit report timeliness. We argue that the existence of covenant violations might motivate clients or banks to seek waivers or renegotiations of current lending contracts. Otherwise, auditors might perform more audit tests before issuing audit opinions. Ultimately, auditors will increase the number of days to complete the audit. Our major findings are consistent with our prediction. In addition, we find that the presence of early covenant violations further increases audit delays. Our findings identify another factor affecting the audit report timeliness and one economic consequence of covenant violations.

Suggested Citation

  • Zane Swanson & Yinghong Zhang, 2018. "Do covenant violations affect audit report timeliness?," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 14(1), pages 1-23.
    • Handle: RePEc:ids:ijaape:v:14:y:2018:i:1:p:1-23
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    Citations

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    Cited by:

    1. Imen Fakhfakh & Anis Jarboui, 2022. "Earnings Management and Audit Report Lag: The Role of Audit Risk-Tunisian Evidence," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 21(1), pages 113-135, March.
    2. repec:mth:ijafr8:v:9:y:2019:i:1:p:152-169 is not listed on IDEAS
    3. Ayad Ahmed Mohammed Al-Qublani & Hasnah Kamardin & Rohami Shafie, 2020. "Audit Committee Chair Attributes and Audit Report Lag in an Emerging Market," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(4), pages 475-492, July.
    4. repec:mth:ijafr8:v:9:y:2019:i:1:p:450-461 is not listed on IDEAS

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