top of page
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
crossref
doi
open access

Published: 22 February 2023

Determinants Audit Report Delay and Its Effects on Investor Reaction in Public Companies in Indonesia

Krishna Kamil, Tri Widyastuti, Nurmala Ahmar, Zulkifli

Sekolah Tinggi Ilmu Ekonomi Indonesia (Indonesia), Universitas Bhayangkara Jakarta Raya (Indonesia), Universitas Pancasila (Indonesia)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf

doi

10.31014/aior.1992.06.01.491

Pages: 124-139

Keywords: Audit Reporting Delay, Legal Compliance Pressure, Restatement, Company Size, Number of Subsidiaries, Audit Firm Size, Auditor Opinion, Investor Reaction

Abstract

The audit report delay cause problems of performance appraisal for all audited companies following the investors’ response negatively to the audited report. The consequences of these report delay make distrust of stakeholders, so the delay of audited report need to be minimized in order for all companies to be trusted in financial statement reports. The aim of this research is to explore the determinants of audit reporting delay in Indonesian stock exchange, especially on development boards. The exploration is then continued by examining the effects of audit report delay in order to respond to investors' negative impressions. Method of research used in this research is the exposure of facts on testing the application of GCG, financial performance. The factors used in this research were audit report delay and auditor’s opinion, investor response proxy by share price. The outcome of the research indicates that GCG and legal compliance pressures have a negative and significant effect on audit reporting delay, while financial performance has a positive and significant impact on audit reporting delay, moderating factors such as legal compliance pressures and KAP size has no effect on audit reporting delay. Audit reporting delay and independent auditor reports affect investor response, while legal compliance pressure and financial performance through audit reporting delay affects investor response.

References

  1. 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. Vol. 10. No. 1, 56– 86. DOI:10.1108/09675420910963397

  2. Ahmad R.A.R., and Kamarudin K.A., 2003. Audit Delay and the Timeliness of Corporate Reporting: Malaysian Evidence. Communication Hawaii International Conference on Business, June, University of Hawaii-West Oahu. https://www.angelfire.com/journal2/khairul/pdf/timeliness.pdf

  3. Amirul, A.M., Md Salleh, M.F . 2014. Convergence to IFRs and Audit Report Lag in Malaysia.  Research Journal of Finance and Accounting Vol.5, No.23, pp : 9-14. https://www.iiste.org/Journals/index.php/RJFA/article/view/18472

  4. Apadore, K. and Noor, MM. 2013. Determinants of Audit Report Lag and Corporate Governance in Malaysia. International Journal of Business and Management. Vol. 8. No. 15, 151-163. DOI:10.5539/IJBM.V8N15P151

  5. Ashton, R. H., Graul, P. R., & Newtown, J. D. 1989. Audit delay and the timeliness of corporate reporting. Contemporary Accounting Research, 5(2), 657–673. doi.org/10.1111/j.1911-3846.1989.tb00732.x

  6. Azubike, J.U.B., Anggreh, M. 2014. Corporate Governance and Audit Delay In Nigerian Quoted Companies. European Journal of Accounting Auditing and Finance Research Vol.2, No.10, 22-33. https://www.eajournals.org

  7. Beasley, M. S., & Salterio, S. E. 2001. The relationship between board characteristics and voluntary improvements in audit committee composition and experience. Contemporary Accounting Research, 18(4), 539–570. https://DOI.org/10.1506/RM1J-A0YM-3VMV-TAMV

  8. Blay, A.D., and Geiger, M.A.. 2001. Market Expectation for First Time Going Concern Recipients,  Journal of Accounting, Auditing, & Finance, 16(3), 209-226.   https://www.academia.edu/20446687/Market_expectations_for_first_time_going_concern_recipients

  9. Boritz, J.E.& Liu, G. 2006. Determinants of the Timeliness of Quarterly Reporting: Evidence from Canadian Firms https://ssrn.com/abstract=875288.

  10. Che-Ahmad, Ayoib and Abidin, Shamharir. 2008. Audit Delay of Listed Companies: A Case of Malaysia. International Business Research. Vol. 1. No. 4, 32–42. DOI:10.5539/ibr.v1n4p32

  11. Cohen, S., & Leventis, S. 2013. Effects of Municipal, Auditing and Political Factors on Audit Delay. Accounting Forum, 37(1), 40-53. https://doi.org/10.1016/j.accfor.2012.04.002

  12. Cullinan, C.P. 2003 Competing Size Theories and Audit Lag: Evidence from Mutual Fund Audits Journal of the American Academy of Business vol 3, Issue 1/2, 183-189. https://digitalcommons.bryant.edu/acc_jou/13/

  13. Fama, E., and Jensen, M. 1983. Separation of ownership and control. Journal of Law and Economics 26 (2): 301– 325. https://www.jstor.org/stable/725104.

  14. FCGI. 2001. Corporate Governance; GCG. Jakarta: FCGI.

  15. Givoly, D., and Palmon D.1984. Timeliness of Annual Earning Announcement, Some Empirical Evidence. The accounting review 57(3), 486-506. https://core.ac.uk/download/pdf/82529823.pdf

  16. Hashim and Rahman. 2011. Audit report lag and the Effectiveness of Audit Committee Among Malaysian Listed Companies. International Bulletin of Business Administration, 10, 50-66. http://www.eurojournals.com/

  17. Herbohn, K., Ragunathan V, and Garsden, R. 2007. The horse has bolted: Revisiting the market reaction to going concern modifications of audit reports. Accounting and Finance, 47(3), 473-493. https://doi.org/10.1111/j.1467-629X.2007.00216.x

  18. Hossain, M. A. and Taylor, P. J., 1998. An Examination of Audit Delay. Evidence from Pakistan. Working Paper, University of Manchester.http://www.mahossain.com/pdf/au

  19. Ilaboya, O. J., Christian, I. 2014. Corporate Governance and Audit Report Lag in Nigeria. International Journal of Humanities and Social Science. Vol. 4, No. 13; 172-180. http://www.ijhssnet.com/journals/Vol_4_No_13_November_2014/20.pdf

  20. Kennedy, P.M, Eraghbe, E andIkhatua, O.J 2012. Determinants of Audit Delay in Nigerian Companie: Empirical Evidence. Research Journal of Finance and Accounting, Vol3(6), 46-54. http://www.iiste.org/

  21. Komite Nasional Kebijakan Corporate Governance (KNKCG) 2006. Pedoman Umum Corporate Governance (General Guidelines for Corporate Governance). https://knkg.or.id/

  22. Lailah, F. 2016. Ketaatan Hukum Mampukah Memoderasi Hubungan Good Corporate Governance terhadap Audit Report Lag (Can Legal Compliance Moderate Good Corporate Governance Relations to Audit Report Lag). National Symposium on Accounting XIX, Lampung.  http://lib.ibs.ac.id/materi/Prosiding/SNA%20XIX%20(19)%20Lampung%202016/makalah/031.pdf

  23. Lai, K.W. 2019 Audit report lag, audit fees, and audit quality following an audit firm merger: Evidence from Hong Kong, Journal of International Accounting, Auditing and Taxation, Vol. 36, pp.1-21

  24. Lamber, R, Leuz, C &Verrecchia, R.E. 1987. Accounting Information, Disclosure, and the Cost of Capital. Journal of Accounting Research, 45(2), 385-420. https://www.jstor.org/stable/4622036

  25. Lee, Ho-Young 2008. A Determinants of Audit report lag: Evidence from Korea – an examination of auditor related factors, The Journal of Applied Business Research, 24(2), 27-44. https://clutejournals.com/index.php/JABR/article/download/1352/1335/5355

  26. Lee, H. Y., V. Mande, and M. Son. 2008. A comparison of reporting lags of multinational and domestic firms. Journal of International Financial Management & Accounting 19 (1):28-56. https://doi.org/10.1111/j.1467-646X.2008.01015.x

  27. Lestari, S.Y&Nuryatno, M, 2018. Factors affecting the Audit Delay and Its Impact on Abnormal Return in Indonesia Stock Exchange, International Journal of Economics and Finance; Vol. 10, No. 2: 48 – 58. https://ideas.repec.org/a/ibn/ijefaa/v10y2018i2p48-56.html

  28. Menon, Krishnagopal and David D. Williams. 2010. Investor Reaction to Going Concern Audit Reports, The Accounting Review, 85(6), 2075-2105. DO1: 10.2308/accr.2010.85.6.2075

  29. Na’im, Ainun. 1999. Nilai informasi ketepatanwaktu penyampaian laporan keuangan: analisis empirik regulasi informasi di Indonesia (The value of information on the timeliness of submission of financial reports: an empirical analysis of information regulation in Indonesia). Jurnal Ekonomi dan Bisnis Indonesia 14(2), 85-99. https://jurnal.ugm.ac.id/jieb/article/view/39445

  30. Najihah .M.Y and Ayoib.C.A .2012. Adoption of FRS 138 and Audit Delay in Malaysia. The International Journal of Economis and Finance, American Academy of Business, Cambridge Vol. 4 Num. 1. DOI:10.5539/ijef.v4n1p167

  31. Nor, M.N.M., Shafie, R., Wan-Husin, N. 2010. Corporate Governance and Audit Report Lag in Malaysia. Asian Academy of Management Journal of Accounting and Finance. Vol. 6, No. 2, 57–84. https://ejournal.usm.my/aamjaf/article/view/aamjaf_vol6-no2-2010_4

  32. OECD. 2005. Good Corporate Governance. Jakarta: PT Damar Mulia Pustaka.

  33. Owusu-Ansah, S. 2000.Timeliness of Corporate Financial Reporting in Emerging Capital Markets: Empirical evidence from the Zimbabwe Stock Exchange. Accounting and Business Research. No. 30, 241–254. https://doi.org/10.1080/00014788.2000.9728939

  34. Pourali, M.R., Jozi, M., Rostami, K.H, Reza, G. 2013. Investigation of Effective Factors in Audit Delay: Evidence from Tehran Stock Exchange (TSE). Research Journal of Applied Sciences, Engineering and Technology. Vol. 5, No. 2, 405-410. https://maxwellsci.com/jp/mspabstract.php?doi=rjaset.5.4966

  35. Sawitri, NMDC & Budiartha, I, 2018 Pengaruh Audit Tenure dan Financial Distress pada Audit Delay dengan Spesialisasi Auditor Sebagai Variabel Pemoderasi.(The Effect of Audit Tenure and Financial Distress on Audit Delay with Auditor Specialization as a Moderating Variable). E-Jurnal Akuntansi, vol. 22, no. 3, pp 1965-1991. https://ojs.unud.ac.id/index.php/Akuntansi/article/view/36807

  36. Audit Standard (SPAP/SA): 2013. Indonesian Institute of Certified Public Accountants, Jakarta, Salemba Empat\

  37. Sutaryo, S., Lase, Y., 2015. Auditor Characteristics and audit delay: Evidence from Indonesian Regional Governance. Corporate Ownership & Control, 13(1), 511-514.https://virtusinterpress.org/Auditors-Characteristics-and-Audit.html

  38. Türel, A., Tuncay, F.E., 2016. An Empirical Analysis of Audit Delay in Turkey.Annales Universitatis Apulensis Series Oeconomica. 18 (2), 78-87. https://ideas.repec.org/a/alu/journl/v2y2016i18p7.html

  39. Vuko, T., Cular, M., 2014. Finding determinants of audit delay by pooled OLS regression analysis. Croatian Operational Research Review, 5(2014), 81-91. https://hrcak.srce.hr/120194 https://hrcak.srce.hr/120194

bottom of page