Abstract
This study explores the influence of board independence, board size, CEO duality, board diligence, board financial expertise and presence of audit committee as well as the type of sector on the timeliness of financial reports among selected Jordanian companies. The timeliness of the financial reports is measured by audit report lag (ARL) and management report lag (MRL). This study covers 112 firms listed on the Amman Stock Exchange for the years 2011 and 2012. The results of the ARL model indicate that companies that have members of board who are independent from management take a significantly shorter time to prepare and issue their financial reports. The results indicate that companies with greater number of board of directors are related with a higher audit report lag. The results also show that companies that separated the CEO and chairman's roles are quicker in publishing financial reports than companies combining the roles of CEO and chairman. In addition, boards of directors with more meetings make the audit report lag shorter. The findings also support that argument that the existence of an audit committee could resolve the information asymmetry between management and external auditors that, in turn, would lead to reduced audit report lag and management report lag. However, the results of the MRL model show that management report lag is related positively to large board size and board diligence and negatively to the existence of audit committee. This study concludes that the good structures of corporate governance play a key role in improving the quality of timeliness of financial reports. DOI: 10.5901/mjss.2015.v6n1p430
Highlights
Timeliness of financial reports has been acknowledged as one of the qualitative characteristics of the basic objective of financial reports (APB, 1970; AICPA, 1973; FASB, 1979)
These results suggest that many of the firms studied did not align with the rules of the Jordanian Corporate Governance Code, which states the Jordanian firms should establish an audit committee to ensure the effective performance of the board of directors
We investigate the influence of corporate governance mechanisms as well as types of sector on the timeliness of financial reports among Jordanian listed firms
Summary
Timeliness of financial reports has been acknowledged as one of the qualitative characteristics of the basic objective of financial reports (APB, 1970; AICPA, 1973; FASB, 1979). Timeliness is an important characteristic of the usefulness of accounting information (Ku Ismail & Chandler, 2004) and regarded as one measure of audit quality (Leventis, Weetman, & Caramanis, 2005). Financial report timeliness has been considered by accounting standards-setting entities all over the globe to be the top crucial quality of financial information as the delay in its publication may lead to costs to both decision makers and relevant users (Brown, Dobbie, & Jackson, 2009). The significance of financial reporting is stressed by the Financial Accounting Standards Board (FASB, 1980) in the Statement of Financial Accounting Concepts No.. The accounting profession and the SEC have stressed requirements for timeliness of financial reports, through statement No 4 of the Accounting Principles Board (1970) that provides the definition of timeliness of financial reports as one of the primary aims of accounting (Givoly & Palmon, 1982)
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