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Late for a very important date: financial reporting and audit implications of late 10-K filings

Author

Listed:
  • Jian Cao

    () (Florida Atlantic University)

  • Feng Chen

    () (University of Missouri)

  • Julia L. Higgs

    () (Florida Atlantic University)

Abstract

Abstract Delays in financial reports often reflect issues related to period-end accounting and audit processes. We investigate the impact of filing delays in connection with auditor characteristics on the quality of financial statements in a sample of firms that filed Form 10-K after the statutory due date. We find that late filing firms are associated with lower financial reporting quality compared to timely filing firms matched by propensity scores, where financial reporting quality is measured by the absolute value of performance-matched discretionary accruals and the probability of a late filing being restated in subsequent periods. Furthermore, we demonstrate that the adverse consequences of late filings can be largely mitigated by having a Big 4 auditor. The differential audit quality stems primarily from Big 4 auditors in large offices and is more pronounced when an auditor may need to draw on additional resources in a limited period.

Suggested Citation

  • Jian Cao & Feng Chen & Julia L. Higgs, 2016. "Late for a very important date: financial reporting and audit implications of late 10-K filings," Review of Accounting Studies, Springer, vol. 21(2), pages 633-671, June.
  • Handle: RePEc:spr:reaccs:v:21:y:2016:i:2:d:10.1007_s11142-016-9351-5
    DOI: 10.1007/s11142-016-9351-5
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    References listed on IDEAS

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    More about this item

    Keywords

    Restatements; Office size; Late SEC filings; Financial reporting quality; Big 4 auditors; Accruals;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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