Determinants of audit report lag: Does implementing corporate governance have any impact? Empirical evidence from Egypt

Abstract

Purpose

There are three main purposes of this study which are: first, to review the literature on audit report lag (ARL) and its determinants; second, to measure the extent of ARL in a developing country, Egypt; and third, to empirically examine the impact of corporate governance (CG) characteristics on ARL in Egypt.

Design/methodology/approach

The literature on determinants of ARL motivated the author to investigate about the impact of CG characteristics and audit‐related characteristics on ARL especially in emerging capital markets, such as the Cairo and Alexandria Stock Exchange (CASE) for a sample (85 companies) of Egyptian listed companies. Further, the study includes explanatory variables relating to CG characteristics, which have not previously been considered (i.e. board independence, duality of chief executive officer (CEO), and existence of an audit committee), that may shed more light on the structure and dynamics of the ARL.

Findings

The ARL for each of the 85 listed sample companies ranged from a minimum interval of 19 days to a maximum interval of 115, and Egyptian listed companies take approximately two months on average. A regression analysis indicates that board independence, duality of CEO, and existence of an audit committee significantly affect ARL. But on the other hand, ownership concentration has insignificant affect on ARL. Also, three control variables (company size, industry and profitability) significantly affected ARL. The adjusted R² indicate that 57.10 per cent of the variation in the dependent variable in the regression model is explained by variations in the independent variables.

Originality/value

This study of Egyptian companies listed on the CASE represents the initial comprehensive examination of ARL, and it is consider the first study to provide a thorough examination of the association between CG characteristics and ARL.

Citation

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, pp. 56-86. https://doi.org/10.1108/09675420910963397