Firm Size, Profitability, Leverage as Determinants of Audit Report Lag: Evidence From Indonesia

Lailah Fujianti,Indra Satria

doi:10.5430/ijfr.v11n2p61

Abstract

This study examines the factors that influence Audit Report Lag in Indonesia. This factor is seen from the financial performance of the company size, profitability and corporate leverage. The research sample was 91 manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the period of 2015 and 2016. The total observation for 2 years amounted to 182. The method of data analysis is random effect models. The results showed that company size and profitability are variables that can shorten Audit Report Lag. Meanwhile, leverage has not empirically proven to have a significant effect. The findings implies that large companies have better information and technology systems compared to smaller companies so as to strengthen internal control and speed of presentation of financial statements. High profitability encourages companies to present financial reports on time so that the impact of ARL decline.

Highlights

Timeliness of the presentation of financial statements in accordance with the deadline set by regulations, is an important element for the functioning of the capital market mechanism
This is not proven in this study because leverage shows no effect on ARL
The results of this study imply that creditors have not put pressure on companies to present financial statements on time and reduce ARL

Summary

Introduction

Timeliness of the presentation of financial statements in accordance with the deadline set by regulations, is an important element for the functioning of the capital market mechanism. The mechanism is intended to provide protection to investors and potential investors This reason is one of the causes of the timeliness of the presentation of financial statements received attention from various parties including regulators (Krishnan and Yang 2009; Abbott et al 2012; Bronson et al 2011). This attention is aimed at the deadline for presenting financial statements. Financial statements that are presented to the public are generally financial statements that have been audited by an external auditor. The period of time from the end of the accounting year to the date of issuance of audited financial statements is called Audit Report Lag / ARL (Reheul et al 2013)

Methods

Results

Discussion

Conclusion