IDEAS home Printed from https://ideas.repec.org/a/ami/journl/v21y2022i4p604-630.html
   My bibliography  Save this article

The Impact of IFRS Adoption and Corporate Governance Mechanisms on Audit Report Lag: Evidence from An Emerging Country

Author

Listed:
  • Souha Ben Gamra

    (Higher Institute of Computer Sciences and Management of Kairouan University of Kairouan, Tunisia)

  • Fadhila Hamza
  • Hela Borgi

    (Department of accounting, College of Business and Administration, Princess Nourah bint Abdulrahman University, Riyadh, Saudi Arabia)

Abstract

Purpose - The purpose of this paper is to investigate the impact of the International Financial Reporting Standards (IFRS) adoption and corporate governance mechanisms (e.g., Board characteristics and Audit Committee (AC) characteristics) on Audit Report Lag (ARL) in an emerging country, named Saudi Arabia. Methodology - We use a sample of 616 firm-year observations from the Tadawul Stock Exchange in Saudi Arabia for the period 2016-2019. Panel regressions were used. Findings - The results indicate that ARL has significantly increased after the IFRSs' adoption. This result may imply that IFRS adoption leads to a need of adaptation process. It may support the need for more training and IFRS education in Saudi Arabia. Additionally, both AC diligence and AC financial expertise significantly reduce ARL. It may support the Saudi regulatory requirement to equip audit committees with at least one member with accounting and financial expertise. However, the results show that AC size and Board characteristics (board size, board independence and board meetings) are not significantly associated with ARL. Contribution - Our study fills the gap in the existing literature by examining the impact of the IFRSs' adoption and the corporate governance characteristics on ARL, whose results remain mixed and rare in Saudi Arabia, an emerging and under-studied context.

Suggested Citation

  • Souha Ben Gamra & Fadhila Hamza & Hela Borgi, 2022. "The Impact of IFRS Adoption and Corporate Governance Mechanisms on Audit Report Lag: Evidence from An Emerging Country," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 21(4), pages 604-630, December.
  • Handle: RePEc:ami:journl:v:21:y:2022:i:4:p:604-630
    as

    Download full text from publisher

    File URL: http://online-cig.ase.ro/RePEc/ami/articles/21_4_6.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bikki Jaggi & Judy Tsui, 1999. "Determinants of audit report lag: further evidence from Hong Kong," Accounting and Business Research, Taylor & Francis Journals, vol. 30(1), pages 17-28.
    2. Ahmed, Kamran & Chalmers, Keryn & Khlif, Hichem, 2013. "A Meta-analysis of IFRS Adoption Effects," The International Journal of Accounting, Elsevier, vol. 48(2), pages 173-217.
    3. Bradley Pomeroy & Daniel Thornton, 2008. "Meta-analysis and the Accounting Literature: The Case of Audit Committee Independence and Financial Reporting Quality," European Accounting Review, Taylor & Francis Journals, vol. 17(2), pages 305-330.
    4. DeZoort, F. Todd & Hermanson, Dana R. & Houston, Richard W., 2003. "Audit committee support for auditors: The effects of materiality justification and accounting precision," Journal of Accounting and Public Policy, Elsevier, vol. 22(2), pages 175-199.
    5. Robert H. Ashton & Paul R. Graul & James D. Newton, 1989. "Audit delay and the timeliness of corporate reporting," Contemporary Accounting Research, John Wiley & Sons, vol. 5(2), pages 657-673, March.
    6. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    7. K. Hung Chan & Vivian Wei Luo & Phyllis L.L. Mo, 2016. "Determinants and implications of long audit reporting lags: evidence from China," Accounting and Business Research, Taylor & Francis Journals, vol. 46(2), pages 145-166, February.
    8. Mohamad Naimi Mohamad-Nor & naimi@uum.edu.my & Rohami Shafie & Wan Nordin Wan-Hussin, 2010. "Corporate Governance and Audit Report Lag in Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 6(2), pages 57-84.
    9. Habib, Ahsan & Bhuiyan, Md. Borhan Uddin, 2011. "Audit firm industry specialization and the audit report lag," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 20(1), pages 32-44.
    10. Watts, Ross L & Zimmerman, Jerold L, 1983. "Agency Problems, Auditing, and the Theory of the Firm: Some Evidence," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 613-633, October.
    11. repec:eme:maj000:02686900510598821 is not listed on IDEAS
    12. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    13. Stephen Owusu-Ansah & Stergios Leventis, 2006. "Timeliness of corporate annual financial reporting in Greece," European Accounting Review, Taylor & Francis Journals, vol. 15(2), pages 273-287.
    14. Mark S. Beasley & Steven E. Salterio, 2001. "The Relationship between Board Characteristics and Voluntary Improvements in Audit Committee Composition and Experience," Contemporary Accounting Research, John Wiley & Sons, vol. 18(4), pages 539-570, December.
    15. Michele D. Meckfessel & Drew Sellers, 2017. "The impact of Big 4 consulting on audit reporting lag and restatements," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 32(1), pages 19-49, January.
    16. Habib, Ahsan, 2011. "Audit firm industry specialization and audit outcomes: Insights from academic literature," Research in Accounting Regulation, Elsevier, vol. 23(2), pages 114-129.
    17. Saeed Rabea Baatwah & Zalailah Salleh & Jenny Stewart, 2019. "Audit committee chair accounting expertise and audit report timeliness," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 27(2), pages 273-306, May.
    18. Siti Rochmah Ika & Nazli A. Mohd Ghazali, 2012. "Audit committee effectiveness and timeliness of reporting: Indonesian evidence," Managerial Auditing Journal, Emerald Group Publishing, vol. 27(4), pages 403-424, April.
    19. Abernathy, John L. & Beyer, Brooke & Masli, Adi & Stefaniak, Chad, 2014. "The association between characteristics of audit committee accounting experts, audit committee chairs, and financial reporting timeliness," Advances in accounting, Elsevier, vol. 30(2), pages 283-297.
    20. Ashton, Rh & Willingham, Jj & Elliott, Rk, 1987. "An Empirical-Analysis Of Audit Delay," Journal of Accounting Research, Wiley Blackwell, vol. 25(2), pages 275-292.
    21. Maria Consuelo Pucheta‐Martínez & Cristina De Fuentes, 2007. "The Impact of Audit Committee Characteristics on the Enhancement of the Quality of Financial Reporting: an empirical study in the Spanish context," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1394-1412, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. repec:mth:ijafr8:v:9:y:2019:i:1:p:152-169 is not listed on IDEAS
    3. Abernathy, John L. & Beyer, Brooke & Masli, Adi & Stefaniak, Chad, 2014. "The association between characteristics of audit committee accounting experts, audit committee chairs, and financial reporting timeliness," Advances in accounting, Elsevier, vol. 30(2), pages 283-297.
    4. Eghosa Inneh & Isaiah Omotayo FAKUNLE & Romoke Rafiat BUSARI & Ibrahim Gbenga OLATUNJI, 2022. "Audit Characteristics and Financial Reporting Timeliness of Nigerian Listed Non-Financial Institution," Journal of Economics and Behavioral Studies, AMH International, vol. 14(2), pages 13-25.
    5. Susana Escaloni & Mercedes Mareque, 2021. "Audit Report Lag. Differential Analysis between Spanish SMEs and Non-SMEs," Sustainability, MDPI, vol. 13(22), pages 1-21, November.
    6. Ishaq Ahmed Mohammed & Ayoib Che-Ahmad & Mazrah Malek, 2018. "Shareholder’s involvement in the audit committee, audit quality and financial reporting lag in Nigeria," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(2), pages 355-374, April.
    7. Imen Fakhfakh Sakka & Anis Jarboui, 2016. "Audit reports timeliness: Empirical evidence from Tunisia," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1195680-119, December.
    8. Beylem Çelik & Gökhan Özer & Abdullah Kürşat Merter, 2023. "The Effect of Ownership Structure on Financial Reporting Timeliness: An Implementation on Borsa Istanbul," SAGE Open, , vol. 13(4), pages 21582440231, November.
    9. Lailah Fujianti, 2019. "The Role of Legal Compliance and Good Corporate Governance on Reducing Audit Delay on Publicly Listed Companies in Indonesia," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 359-365, December.
    10. George Drogalas & Michail Nerantzidis & Dimitrios Mitskinis & Ioannis Tampakoudis, 2021. "The relationship between audit fees and audit committee characteristics: evidence from the Athens Stock Exchange," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(1), pages 24-41, March.
    11. Ahnaf Alsmady, 2018. "The Effect of Board of Directors’ Characteristics and Ownership Type on the Timeliness of Financial Reports," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(6), pages 276-276, April.
    12. Hua-Wei Huang & Mai Dao & Wen-Chi Sun, 2017. "The Timeliness of Financial Reporting and Fair Values: Evidence from U.S. Banks," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-30, March.
    13. Alexeyeva, Irina, 2024. "Does board composition impact the timeliness of financial reporting? Evidence from Swedish privately held companies," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 54(C).
    14. Lailah Fujianti & Indra Satria, 2020. "Firm Size, Profitability, Leverage as Determinants of Audit Report Lag: Evidence From Indonesia," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 61-67, April.
    15. 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.
    16. Yan Luo & Steven E. Salterio, 2021. "Toward an Archival Measure of the Likelihood of Auditor‐Client Management Negotiation: An Exploration of the Audit Lag Measures Conjecture†," Accounting Perspectives, John Wiley & Sons, vol. 20(1), pages 109-143, March.
    17. Ahmad Yuosef Alodat & Zalailah Salleh & Hafiza Aishah Hashim & Farizah Sulong, 2021. "Corporate governance and firm performance: empirical evidence from Jordan," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 20(5), pages 866-896, August.
    18. Wan-Hussin, Wan Nordin & Bamahros, Hasan Mohammed, 2013. "Do investment in and the sourcing arrangement of the internal audit function affect audit delay?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 9(1), pages 19-32.
    19. Zeinab Azami & Tabandeh Salehi, 2017. "The relationship between audit report delay and investment opportunities," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 7(3), pages 437-449, December.
    20. Patrick Velte, 2023. "The impact of external auditors on firms’ financial restatements: a review of archival studies and implications for future research," Management Review Quarterly, Springer, vol. 73(3), pages 959-985, September.
    21. Dr. N.O Dibia & J.C Onwuchekwa, 2013. "An Examination Of The Audit Report Lag Of Companies Quoted In The Nigeria Stock Exchange," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 3(9), pages 8-16, July.

    More about this item

    Keywords

    Audit Report Lag; Corporate governance; Saudi Arabia; IFRS;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ami:journl:v:21:y:2022:i:4:p:604-630. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cristina Tartavulea (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.