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Audit-related attributes, regulatory reforms and timely disclosure

Audit-related attributes, regulatory reforms and timely disclosure PurposeThis paper aims to examine the impact of audit-related attributes and regulatory reforms on timely disclosure as proxied by audit report lag (ARL) in an emerging market setting, namely, Egypt.Design/methodology/approachThe paper used the balanced panel data of 372 firm-years observations of the most actively traded companies on the Egyptian Stock Exchange over the period from 2007 to 2010. The study measures the dependent variable of ARL as the number of days between the client’s fiscal year-end and the audit report.FindingsMultivariate analysis indicates that audit committee activity (proxy for regulatory reforms) and external auditor type (proxy for audit-related attributes) contribute significantly to the reduction of ARL and increase disclosure timeliness. Furthermore, the paper found that ARL witnessed a slight decrease following the adoption of the new Egyptian Standards on Auditing (ESA). Finally, the paper’s findings show that industry types moderate the relationship between ARL and several audit-related variables and corporate governance attributes.Practical implicationsThe results may have policy implications for both regulators and investors. For instance, policymakers in Egypt can enact new rules to reduce the Chief Executive Officer duality and establish the minimum required number of audit committee meetings to improve transparency level and, thus, increase disclosure timeliness. Besides, if future regulations aiming to increase disclosure timeliness are intended by Egyptian regulators, this paper’s findings suggest that this may have implications for the audit market because the Big Four audit firms will be more able to meet shorter audit delays.Originality/valueThe empirical evidence provided in this study further enhances the understanding of timely disclosure in Egypt which represents one of the leading emerging markets in the Middle East and North Africa region. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Reporting and Accounting Emerald Publishing

Audit-related attributes, regulatory reforms and timely disclosure

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1985-2517
DOI
10.1108/JFRA-08-2015-0077
Publisher site
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Abstract

PurposeThis paper aims to examine the impact of audit-related attributes and regulatory reforms on timely disclosure as proxied by audit report lag (ARL) in an emerging market setting, namely, Egypt.Design/methodology/approachThe paper used the balanced panel data of 372 firm-years observations of the most actively traded companies on the Egyptian Stock Exchange over the period from 2007 to 2010. The study measures the dependent variable of ARL as the number of days between the client’s fiscal year-end and the audit report.FindingsMultivariate analysis indicates that audit committee activity (proxy for regulatory reforms) and external auditor type (proxy for audit-related attributes) contribute significantly to the reduction of ARL and increase disclosure timeliness. Furthermore, the paper found that ARL witnessed a slight decrease following the adoption of the new Egyptian Standards on Auditing (ESA). Finally, the paper’s findings show that industry types moderate the relationship between ARL and several audit-related variables and corporate governance attributes.Practical implicationsThe results may have policy implications for both regulators and investors. For instance, policymakers in Egypt can enact new rules to reduce the Chief Executive Officer duality and establish the minimum required number of audit committee meetings to improve transparency level and, thus, increase disclosure timeliness. Besides, if future regulations aiming to increase disclosure timeliness are intended by Egyptian regulators, this paper’s findings suggest that this may have implications for the audit market because the Big Four audit firms will be more able to meet shorter audit delays.Originality/valueThe empirical evidence provided in this study further enhances the understanding of timely disclosure in Egypt which represents one of the leading emerging markets in the Middle East and North Africa region.

Journal

Journal of Financial Reporting and Accounting – Emerald Publishing

Published: Jul 3, 2017

References

  • Introducing international accounting standards to an emerging capital market: relative familiarity and language effect in Egypt
  • Determinants of audit report lag: does implementing corporate governance have any impact? Empirical evidence from Egypt
  • Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies
  • Corporate characteristics, governance rules and the extent of voluntary disclosure in Spain
  • Audit structure and other determinants of audit reporting: an empirical analysis