Audit Delay and the Timeliness of Corporate Reporting: Malaysia Evidence

AUDIT DELAY AND THE TIMELINESS OF CORPORATE REPORTING: MALAYSIAN EVIDENCE

Raja Adzrin Raja Ahmad* Khairul Anuar Kamarudin* * Lecturers, MARA University of Technology, Malaysia ABSTRACT This paper investigates the determinants of audit delay in Malaysia. The sample comprises 100 companies listed in the Kuala Lumpur Stock Exchange during the period 1996-2000. Descriptive statistics indicate the audit delay to be more than 100 days for the five years under study with a minimum standard deviation of 36 days. Eight hypotheses relating audit delay to company size, industry classification, sign of income, extraordinary item, audit opinion, auditor, year-end and risk are tested in this study. The results from the t-test of differences, chi-square test of independent and ordinary least square regression (OLS) largely support the alternate hypotheses put forward except for the extraordinary items and the company size. The primary findings are that the audit delay is significantly longer for companies that (1) are non-financial industry, (2) receive other than unqualified audit opinions, (3) have other than 31 December as the financial year end, (4) are audited by non big-five, (5) incur negative earnings and (6) have higher risk. It is hoped that this study, which is conducted in an economically and culturally different context from all existing studies can contribute towards the current literature on audit delay.

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INTRODUCTION Timeliness is an important qualitative attribute of financial statement, which requires the information to be made available to the users as rapidly as possible. The increase in the reporting lag reduces the information content and the relevancy of the documents. The recognition that the length of audit may be the single most important determinant affecting the timing of earnings announcement has motivated recent research on audit delay, (Whittred, 1980b; Givoly and Palmon, 1982; and Carslaw and Kaplan, 1991). Abdulla (1996) suggested that the

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