Does Audit Committee Busyness Impact Audit Report Lag?
Abstract
:1. Introduction
2. Prior Literature and Hypotheses Development
2.1. Audit Committee
2.2. AC Characteristics and ARL
2.3. Hypotheses Development
2.3.1. Busyness of AC Members and ARL
2.3.2. Busyness of AC Chairs and ARL
3. Research Method
3.1. Sample Selection
3.2. Dependent Variable
3.3. Independent Variables
3.4. Control Variables
3.5. Statistical Model and Estimation Method
4. Results
4.1. Descriptive Statistics
4.2. Correlation Analysis
4.3. Regression Models (Random Effect)
4.4. Additional Analysis
5. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
References
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No. of Observations Available for Saudi Non-Financial Listed Firms | 568 |
---|---|
Less: Firms with a missing board report | (53) |
Total firm-year observations | 515 |
Variable | Measurement |
---|---|
ARL | Number of days from the FYE to ARD |
BusyAC | The total number of AC members held outside directorships, scaled by total number of AC members |
BusyACChr | A dummy variable that takes a value of 1 if the AC chair has outside directorships and 0 otherwise |
AuditOpin | A dummy variable that takes a value of 1 if firm had a qualified audit opinion including going-concern opinion and 0 otherwise |
Big4 | The dichotomous variable coded as 1 if firm is audited by one of big four audit firms and 0 otherwise |
BrdSize | The number of board members |
BrdMeet | The number of board meetings held per year |
ACSize | The number of audit committee members |
ACMeet | The number of AC meetings held per year |
ACFE | The percentage of AC financial expert to total number of AC members. |
FSize | The natural logarithm of total assets |
ROE | Net income divided by total equity |
Lev | Total debt to total assets |
Panel A: | |||||
Variable | N | Mean | S. D | Minimum | Maximum |
ARL | 515 | 73.7495 | 21.3239 | 16 | 197 |
BusyAC | 515 | 0.6398 | 0.2751 | 0 | 1 |
BusyACChr | 515 | 0.9379 | 0.2416 | 0 | 1 |
Control variables | |||||
AuditOpin | 515 | 0.0913 | 0.2883 | 0 | 1 |
Big4 | 515 | 0.4311 | 0.4957 | 0 | 1 |
BrdSize | 515 | 8.0194 | 1.5643 | 3 | 11 |
BrdMeet | 515 | 5.4524 | 2.3587 | 1 | 25 |
ACSize | 515 | 3.4816 | 0.7065 | 2 | 5 |
ACMeet | 515 | 5.8233 | 2.4339 | 1 | 31 |
ACFE | 515 | 0.7609 | 0.2510 | 0 | 1 |
FSize | 515 | 9.3057 | 0.7602 | 7.3802 | 12.3350 |
ROE | 515 | 0.02797 | 0.2750 | −2.2446 | 0.7598 |
Lev | 515 | 0.4960 | 0.5735 | 0.0053 | 6.9225 |
Panel B: | |||||
Variable | N | Number of 0 (%) | Number of 1 (%) | ||
BusyACChr | 515 | 32 (6.21%) | 483 (93.79%) | ||
AuditOpin | 515 | 468 (90.87%) | 47 (9.13%) | ||
Big4 | 515 | 293 (56.89%) | 222 (3.11) |
ARL | BusyAC | BusyACChr | AuditOpin | Big4 | BrdSize | BrdMeet | ACSize | ACMeet | ACFE | FSize | ROE | Lev | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
ARL | 1 | ||||||||||||
BusyAC | 0.0288 | 1 | |||||||||||
BusyACChr | 0.2243 *** | 0.4128 *** | 1 | ||||||||||
AuditOpin | 0.3924 *** | −0.0962** | −0.0022 | 1 | |||||||||
Big4 | −0.2171 *** | 0.1440 *** | 0.0291 | −0.2078 *** | 1 | ||||||||
BrdSize | −0.1595 *** | 0.1402 *** | 0.0650 | −0.0385 | 0.2275 *** | 1 | |||||||
BrdMeet | −0.0583 | 0.1394 *** | −0.0223 | 0.0822 * | 0.0941 ** | 0.1305 *** | 1 | ||||||
ACSize | −0.1497 *** | 0.0483 | −0.0067 | −0.0347 | 0.1616 *** | 0.4087 *** | 0.1644 *** | 1 | |||||
ACMeet | −0.0158 | 0.0868 ** | 0.0011 | 0.0757 * | 0.0874 ** | 0.1992 *** | 0.2793 *** | 0.0824 * | 1 | ||||
ACFE | 0.0138 | 0.1669 *** | 0.0791 * | −0.0304 | 0.0270 | 0.1527 *** | −0.0140 | 0.1064 ** | 0.0844 * | 1 | |||
FSize | −0.3067 *** | 0.1687 *** | −0.0431 | −0.2052 *** | 0.4932 *** | 0.5133 *** | 0.1756 *** | 0.4430 *** | 0.1466 *** | 0.0533 | 1 | ||
ROE | −0.3062 *** | −0.0757 * | −0.0587 | −0.2850 *** | 0.2476 *** | 0.1191 *** | −0.0814 * | 0.0603 | −0.0206 | 0.0414 | 0.3706 *** | 1 | |
Lev | 0.0804 * | −0.0570 | −0.0640 | 0.0220 | −0.0301 | −0.0078 | 0.0073 | −0.0330 | −0.0165 | 0.1014 ** | −0.0725 * | −0.1053 ** | 1 |
Variable | VIF Model 1 | 1/VIF Model 1 | VIF Model 2 | 1/VIF Model 2 |
---|---|---|---|---|
FSize | 1.96 | 0.511 | 1.96 | 0.510 |
BrdSize | 1.50 | 0.665 | 1.51 | 0.661 |
Big4 | 1.39 | 0.721 | 1.39 | 0.721 |
ACSize | 1.35 | 0.740 | 1.35 | 0.743 |
ROE | 1.20 | 0.835 | 1.18 | 0.850 |
AuditOpin | 1.16 | 0.861 | 1.15 | 0.870 |
BrdMeet | 1.15 | 0.866 | 1.14 | 0.876 |
ACMeet | 1.13 | 0.882 | 1.13 | 0.882 |
BusyAC | 1.12 | 0.892 | ||
ACFE | 1.08 | 0.925 | 1.06 | 0.947 |
BusyACChr | 1.03 | 0.967 | ||
Lev | 1.03 | 0.967 | 1.03 | 0.968 |
Mean VIF | 1.28 | 1.27 |
Dependent Variable (ARL) Model 1 | Dependent Variable (ARL) Model 2 | ||
---|---|---|---|
BusyAC | 8.2298 ** | BusyACChr | 11.9672 ** |
2.01 | 2.06 | ||
AuditOpin | 20.7723 *** | AuditOpin | 20.6950 *** |
3.22 | 3.27 | ||
Big4 | −2.6262 | Big4 | −2.8410 |
−1.23 | −1.34 | ||
BrdSize | −0.6776 | BrdSize | −0.7646 |
−0.80 | −0.92 | ||
BrdMeet | −0.4377 | BrdMeet | −0.4015 |
−0.85 | −0.80 | ||
ACSize | 0.0245 | ACSize | −0.1778 |
0.01 | −0.10 | ||
ACMeet | −0.2847 | ACMeet | −0.2516 |
−0.77 | −0.69 | ||
ACFE | −3.6329 | ACFE | −3.6962 |
−0.73 | −0.73 | ||
FSize | −3.0084 | FSize | −2.1674 |
−1.27 | −0.97 | ||
ROE | −12.0695 *** | ROE | −12.3395 *** |
−2.63 | −2.74 | ||
Lev | 2.2960 ** | Lev | 2.4662 *** |
2.24 | 2.65 | ||
Constant | 99.8381 *** | Constant | 87.7176 *** |
4.55 | 4.23 | ||
Industry | Yes | Industry | Yes |
Years | Yes | Years | Yes |
Wald chi2(22) | 68.51 | Wald chi2(22) | 72.91 |
Prob > chi2 | 0.00 | Prob > chi2 | 0.00 |
R-squared | %28.25 | R-squared | %31.42 |
No. of Obs | 515 | No. of Obs | 515 |
Dependent Variable (ARL2) Model 3 | Dependent Variable (ARL2) Model 4 | ||
---|---|---|---|
BusyAC | 0.0540 ** | BusyACChr | 0.1076 ** |
2.22 | 2.06 | ||
AuditOpin | 0.0834 *** | AuditOpin | 0.0855 *** |
3.37 | 3.55 | ||
Big4 | −0.0133 | Big4 | −0.0166 |
−0.91 | −1.13 | ||
BrdSize | −0.0021 | BrdSize | −0.0032 |
−0.41 | −0.65 | ||
BrdMeet | −0.0007 | BrdMeet | −0.0007 |
−0.26 | −0.23 | ||
ACSize | 0.0021 | ACSize | 0.0007 |
0.16 | 0.06 | ||
ACMeet | −0.0011 | ACMeet | −0.0009 |
−0.59 | −0.47 | ||
ACFE | −0.0164 | ACFE | −0.0217 |
−0.54 | −0.69 | ||
FSize | −0.0282 | FSize | −0.0213 |
−1.57 | −1.31 | ||
ROE | −0.0563 ** | ROE | −0.0580 ** |
−2.34 | −2.49 | ||
Lev | 0.0116 | Lev | 0.0146 ** |
1.48 | 2.02 | ||
Constant | 2.0599 *** | Constant | 1.9478 *** |
11.96 | 12.07 | ||
Industry | Yes | Industry | Yes |
Years | Yes | Years | Yes |
Wald chi2(22) | 65.58 | Wald chi2(22) | 70.17 |
Prob > chi2 | 0.00 | Prob > chi2 | 0.00 |
R-squared | %22.1 | R-squared | %29.5 |
No. of Obs | 515 | No. of Obs | 515 |
Fixed Effect | Pooled OLS | ||||||
---|---|---|---|---|---|---|---|
Dependent Variable (ARL) Model 1 | Dependent Variable (ARL) Model 2 | Dependent Variable (ARL) Model 1 | Dependent Variable (ARL) Model 2 | ||||
BusyAC | 11.9385 ** | BusyACChr | 7.2063 | BusyAC | 7.4977 ** | BusyACChr | 19.4476 *** |
2.41 | 1.22 | 2.14 | 4.20 | ||||
AuditOpin | 18.6854 *** | AuditOpin | 18.1953 *** | AuditOpin | 24.3100 *** | AuditOpin | 23.8108 *** |
2.67 | 2.62 | 4.67 | 4.67 | ||||
Big4 | −0.5127 | Big4 | −0.5550 | Big4 | −2.7498 | Big4 | −3.0239 * |
−0.15 | −0.16 | −1.58 | −1.75 | ||||
BrdSize | −1.4421 | BrdSize | −1.4814 | BrdSize | −0.3262 | BrdSize | −0.5587 |
−0.72 | −0.74 | −0.53 | −0.92 | ||||
BrdMeet | 0.2501 | BrdMeet | 0.3058 | BrdMeet | −1.0672 ** | BrdMeet | −0.9702 ** |
0.57 | 0.71 | −2.28 | −2.25 | ||||
ACSize | 2.2546 | ACSize | 1.9321 | ACSize | −1.4386 | ACSize | −1.5451 |
0.79 | 0.66 | −1.06 | −1.18 | ||||
ACMeet | −0.2194 | ACMeet | −0.2482 | ACMeet | −0.2997 | ACMeet | −0.2073 |
−0.52 | −0.57 | −0.90 | −0.64 | ||||
ACFE | −10.0705 * | ACFE | −10.4328 * | ACFE | 0.3659 | ACFE | 0.6758 |
−1.72 | −1.67 | 0.09 | 0.17 | ||||
FSize | 1.2453 | FSize | 0.2635 | FSize | −2.2715 | FSize | −1.2922 |
0.12 | 0.03 | −1.33 | −0.77 | ||||
ROE | −12.4968 ** | ROE | −12.9319 ** | ROE | −12.4183 *** | ROE | −12.2836 *** |
−2.19 | −2.28 | −3.62 | −3.62 | ||||
Lev | 1.5961 | Lev | 1.3295 | Lev | 2.2622 *** | Lev | 2.6454 *** |
0.27 | 0.21 | 2.87 | 2.94 | ||||
Constant | 60.9796 | Constant | 72.9003 | Constant | 95.0868 *** | Constant | 74.0332 *** |
0.62 | 0.74 | 6.18 | 4.80 | ||||
Industry | No | Industry | No | Industry | Yes | Industry | Yes |
Years | Yes | Years | Yes | Years | Yes | Years | Yes |
F (14,361) | 4.24 | F (14,361) | 4.39 | F (14,361) | 9.24 | F (22,492) | 10.95 |
Prob > F | 0.00 | Prob > F | 0.00 | Prob > F | 0.00 | Prob > F | 0.00 |
R-squared | %14.6 | R-squared | %14.1 | R-squared | %29.2 | R-squared | %32.9 |
Adj R-squared | %−12.2 | Adj R-squared | %−11.7 | Adj R-squared | %26.1 | Adj R-squared | %29.9 |
No. of Obs | 515 | No. of Obs | 515 | No. of Obs | 515 | No. of Obs | 515 |
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Alsheikh, A.H.; Alsheikh, W.H. Does Audit Committee Busyness Impact Audit Report Lag? Int. J. Financial Stud. 2023, 11, 48. https://doi.org/10.3390/ijfs11010048
Alsheikh AH, Alsheikh WH. Does Audit Committee Busyness Impact Audit Report Lag? International Journal of Financial Studies. 2023; 11(1):48. https://doi.org/10.3390/ijfs11010048
Chicago/Turabian StyleAlsheikh, Awatif Hodaed, and Warda Hodaed Alsheikh. 2023. "Does Audit Committee Busyness Impact Audit Report Lag?" International Journal of Financial Studies 11, no. 1: 48. https://doi.org/10.3390/ijfs11010048