Abstract
Delays in financial reporting give a negative signal to the market and adversely affect the company’s market value. Financial reporting lags raise suspicions among market participants regarding concealment of any potential bad news by a firm, which may affect its share value. Thus, the study investigates the interaction of audit reporting lag and firm value in Nigerian beverage and food companies. Audit delays lead to the late publication of financial statements, enhancing the information asymmetry problem, and affecting firm value. We obtained the data from annual reports of 10 listed companies for five years. The Generalized Method of Moments (GMM) estimation is used to analyze the data. The results suggest that audit delays do not affect the market value of a firm. Previous studies mainly focus on the relationship between corporate governance firm characteristics, and audit reporting lag in Nigeria. To the best of our knowledge, the impact of audit delays on firm value in Nigeria is yet to be adequately explored. The finding may help statutory bodies in reducing the period of financial reporting. The results may also help firms improve their performance and promote an environment that may give investors confidence. This study has focused on the food and beverage sector in Nigeria. Future studies can be undertaken in other sectors which may bring more insight to the issues related to financial reporting lags.
Highlights
Firm value is a measure of shareholder wealth
The aim of this study was to understand the nexus between audit reporting lag and firm value
The research has focused on 10 Nigerian listed food and beverage companies from 2012 to 2017
Summary
Firm value is a measure of shareholder wealth. Firm value is determined in the stock market, i.e., the market value of shares owned by shareholders (Sanyaolu, Odunayo, & Graig, 2019). Investors’ financing decisions are highly dependent on the prospects of capital appreciation and growth opportunities. Shareholders do not take part in the management of a company. Instead, they appoint agents (i.e., the board of directors) to manage the firm on their behalf. The publication of audited financial statements regularly is highly imperative (Al-Khaddash et al, 2013). The financial statements serve as a primary source of information for financial analysis and investment decision making. Financial statements provide information about the financial health to the stakeholders of a firm
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