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This 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.

The 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.

Multivariate 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.

The 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.

The 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.

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.

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.

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.

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.

The purpose of this paper is to provide a meta‐analysis of the effect of: auditor and audit‐related variables; and firm‐specific variables on auditors' propensity to issue modified audit opinions. Auditor and audit‐related variables include Big N affiliation, audit firm industry specialization, audit firm and audit partner tenure, provision of non audit services and audit report lag. Some of the important firm‐specific variables include firm size, leverage, and profitability.

The Stouffer combined test is employed as the meta‐analysis technique for this paper. The test produces a z‐statistic that can be used to test the direction and significance of the effect of the hypothesized variables on the propensity of auditors to issue modified audit opinions. A total of 73 published studies are aggregated from 1982 to 2011.

Meta‐analysis result reveals that the effect of audit and auditor‐related variables on audit opinion decisions is far from conclusive. Big N affiliation and audit report lag variables are found to be positively related while the association between non‐audit fees and modified audit opinion decisions is negative. However, the significant effect of non‐audit fee variable is found only in non US studies. Evidence on the effect of firm‐specific variables on auditors' propensity to issue modified audit opinions is broadly consistent with hypotheses formulated in the published studies.

Meta‐analysis statistically aggregates results across individual studies and corrects for statistical artefacts like sampling and measurement error and, thereby, provides much greater precision with respect to the findings, compared with narrative reviews. The findings should be relevant for the current project on audit reporting initiated by the International Auditing and Assurance Standards Board (IAASB).

Audit opinion formulation is a complex procedure that culminates in the issuance of appropriate audit opinions. This paper adds value to the strand of audit opinion formulation research by documenting that some of the variables are more significant in explaining auditors' modified audit opinion decisions compared to other variables.

In 2001, the US moved to regulate internal control reporting by management and auditors. While some jurisdictions have followed the lead of the US, many others have not. An important question, therefore, is the relevance of internal control to stakeholders. The more specific issue of the benefits of US-style regulation of internal control reporting is also topical. We review studies on the determinants of internal control quality and its economic consequences for stakeholders including investors, creditors, managers, auditors and financial analysts. We extend previous reviews by focusing on US studies published since 2013 as well as all non-US studies investigating IC quality including countries regulating IC disclosure as well as unregulated settings and both developed and developing economies. In doing so, we identify research questions where evidence remains mixed and new directions in which there are research opportunities.

Three main insights arise from our analysis. First, evidence on the economic consequences of internal control quality suggests that the quality of internal control can have a significant effect on decision making by users of financial information. Second, the results of research on the empirical association between ownership structure, certain board characteristics and internal control quality is generally mixed. Empirical evidence concerning the association between audit committee characteristics and internal control quality generally supports a positive and significant association. Finally, while studies in non-US jurisdictions are increasing, opportunities remain to explore the determinants and consequences of internal control in other jurisdictions. Our review provides evidence for policy makers of whether there are benefits from requiring management and auditors to report on internal control over financial reporting.

A persistent and increasing pattern in cash holdings was notable in the aggregate behaviour of Indian corporations around the period from 2007–2008 to 2012–2013. Extant literature suggests that agency conflicts and financing frictions are important determinants of cash holdings. In this chapter the author aims to shed light on the role of corporate governance (CG) in the determination of cash holdings and examined how ownership structure, board and audit-related attributes (used as proxies for the nature of CG) impact cash holdings in the context of an emerging economy, like India. The author employed four different measures of cash and liquidity and 24 structural indicators of CG. Using principal component analysis, the author offers an exploratory inquiry into the dimensions of CG. Thereafter, multiple regression was used to delve into the association between cash holdings (the dependent variable) and CG. Using a sample of 58 top-listed companies the results revealed that the quality of firm-level CG is important in deciding corporate cash holdings. The author reported that firms with stronger CG tend to reduce cash balances and have higher capital expenditures, while in firms with entrenched managers having high cash reserves invest more in current assets. Firms also hold cash for financial flexibility and to take advantage of strategic opportunities as they present themselves. Parallel to this point is the fact that larger balances help firms to avoid uncertainty and hedge themselves against the difficulty of accessing external funds.

This study aims to examine the relationship between the individual auditor’s industry specialization and the audit report lag (hereafter ARD). Further, it explores whether changing in the audit reporting requirement (i.e. the adoption of ISA701) influences the auditor’s industry specialization effect on the ARD.

A large data set of companies listed on the NASDAQ OMX Stockholm over the period 2010–2019 has been analyzed. Least squares regressions have been estimated to provide empirical evidence for the researched hypotheses.

The research findings indicate that the ARD is shorter for client firms audited by an industry specialist audit partner. Testing for the moderating role of changing in the auditing reporting regulation on the relation between the audit partner’s industry specialization and the ARD, the authors reveal that all client firms (except client firms with industry specialist audit partners) experienced an increase in the ARD. Overall, the baseline regression findings are found to be robust to the endogenous auditor choice and multiple measures of both the ARD and the auditor’s industry specialization.

This paper provides novel evidence on the relationship between the audit reporting lag and industry specialization from the individual auditor perspective, an issue that has hitherto been unexplored. The regression results further contribute to the upsurge debate about the consequences of changing in the audit reporting model by providing consistent support for the importance of industry specialization of the audit partner in minimizing costs derived from the former requirement.

As technology integration in auditing continues to grow, it is important to understand how auditors perceive connections between use of generalized audit software (GAS) and audit benefits.

The DeLone and McLean information systems success model (2003) is adapted with audit-related uses of GAS as antecedents to information quality. Survey data on 188 current users of GAS, who are financial and IT auditors, is analyzed with partial least squares method.

For financial auditors, detecting material misstatements antecedent is the only significant indicator of information quality for GAS. For IT auditors, detecting control deficiencies and fraud significantly impacts information quality. Information quality influences use for both auditors; however, it only influences satisfaction with GAS for financial auditors. System quality impacts GAS satisfaction for only IT auditors and has no impact on GAS use for either type of auditor. Service quality influences use of GAS for financial, but not IT auditors. For both groups, service quality has no impact on satisfaction with GAS, and GAS use and satisfaction with GAS positively increases their perceptions of audit benefits.

Financial and IT auditors who use GAS are both focused on matching GAS use with their primary audit objectives. Results suggest that as GAS use increases, system quality may be important to satisfaction. Training should first focus on the usefulness of GAS to the audit to increase extent of use. Lastly, the more auditors use GAS and are satisfied with it, the greater their perception GAS contributing directly to benefit the audit.

The purpose of this paper is to investigate the roles of chief accounting officer (CAO) on the efficiency of auditing process and to empirically examine the association between separate CAO appointment and audit report lag (ARL).

This study employs firms listed in the US market from 2004 to 2012. The firm year having a CAO who does not simultaneously take other executive position is specifically identified. Firm years with job titles similar to CAO, such as chief accounting executive, vice president of accounting or corporate accounting executive, are categorized into the CAO group.

The presence of a separate CAO significantly reduces ARL. With the appointment of a new auditor, the presence of a separate CAO is associated with lower ARL, suggesting the moderating effect of separate CAOs on the relationship between auditor change and audit delay.

This study shows the importance of CAO, an executive who is specifically responsible for carrying out accounting functions. The findings suggesting the positive effects of separate CAO on external audit process and the timeliness of information should be of interest to firms, financial reporting users, auditors and regulators.

While few studies address CAO-related issues, the roles of a CAO are not widely explored and how a separate CAO affects external audit process remains an open question. This study fills this gap and further documents the contribution of separate CAO in external audit work to enrich literature in executive roles and audit efficiency at the same time.

This paper aims to examine the question of whether external auditors incorporate equity holdings by overlapping audit committee members as a priced governance factor and tests whether this attribute, as a mechanism for ensuring good governance, affects the propensity for external auditors to issue modified audit opinions.

Overlapping membership in this context refers to the arrangement where at least one audit committee member also sits on the compensation committee. Both ordinarily least square and logistic regression are used to capture the impact of overlapping committee members and equity holding of those overlapping committee members.

Using archival data from Australian Stock Exchange listed companies, the authors find support for the beneficial effect of having overlapping audit committee members with equity holdings. The authors also find that auditor propensity to issue modified audit opinions is lower for firms with equity holdings by overlapping audit committee members.

The finding has practical implication to the investors and regulators as overlapping audit committee members with equity holdings may provide especially effective oversight by monitoring opportunistic accounting policy choices for maximizing compensation pay. To the extent that this occurs, audit risk will decrease, requiring less audit effort and lower audit fees than would otherwise be necessary. Similarly, such oversight is likely to make financial reporting more credible and will reduce the possibility of receiving modified audit opinions by reporting organizations.

Both audit and compensation committees are equally important in modern organizations. While both of the committee have distinctive responsibilities, questions remain on the desirability of overlapping audit committee. Also, this is the first study to the authors’ knowledge that incorporates overlapping membership on audit and compensation committee as an important component of auditor risk perception which regards in pricing the audit fees.

This paper aims to identify the most significant governance provision in enhancing the financial information quality of UK listed firms. In addition, it investigates the influence of this governance provision in explaining stock returns of 20 UK industry portfolios.

To identify the main governance provision in enhancing the accruals quality, the paper runs regressions of accruals quality variable on the total governance variable, on the governance provisions individually, and on the governance provisions taken together with and without integrating control variables. Next, Asset Pricing tests are employed to examine the capacity of the audit provision, as proved the most influential governance provision on accruals quality, to explain stock returns. The quantitative approach used in the paper enables to investigate the relationship between corporate governance, accruals quality, and stock returns.

Results indicate that audit provision is the most important governance mechanism affecting accruals quality. In addition, this mechanism is comparable with the book-to-market factor in explaining the time-series variation in portfolios returns. Furthermore, the introduction of the Audit factor to Fama-French model reduces the significance of the size factor and the book-to-market factor in explaining stock returns. This suggests that size and the book-to-market factors contain information related to the audit provision.

The findings of the paper carry implications for investors as they do not need to equally weight all corporate governance provisions in their resource allocation decisions. The significant influence of audit provision on accruals quality needs to be taken into consideration when investment decisions are made. Audit factor is important in predicting future returns. It is also found to be as good as book-to-market factor in explaining portfolios returns. Also, the findings have many implications for regulatory bodies in their efforts to enhance financial information quality. Establishing roles for best governance in reducing information risk should focus, among other things, on the significant elements of corporate governance in improving accruals quality. The main limitation of the study is the restricted variation in the Audit governance factor which comes from the source of corporate governance data, i.e. CGQ. Firms in the sample do not exhibit diversified levels of Audit scores. Accordingly, when constructing audit risk factor it was found that firms could only be split into two portfolios according to their Audit scores instead of five.

This study identifies audit provision as the most significant governance mechanism in enhancing the financial information quality of UK listed firms. In addition, a factor representing audit provision is constructed to investigate the influence of this provision on stock returns. To the authors' knowledge, this is the first study that examines the capacity of the audit provision to explain stock returns in an asset pricing framework.