The Timeliness of Financial Reporting among Jordanian Companies: Do Company and Board Characteristics, and Audit Opinion Matter?

Khaldoon Ahmad Al Daoud,Ku Nor Izah Ku Ismail,Nor Asma Lode

doi:10.5539/ass.v10n13p191

Abstract

This study investigates the influence of board independence, board size, auditor's opinion, profitability (good or bad news) and industry sector, on the timeliness of annual financial reports among Jordanian companies. It covers 114 listed companies on the Amman Stock Exchange for the year 2012. The timeliness of the financial reports is measured by audit report lag. We find that the firms, on average, take more than two months to complete the audit of financial reporting. Consistent with most studies, we find that firms with improved performance (good news) are faster in publishing their financial reports than firms with declining performance (bad news). The results also show that firms with an unqualified audit opinion release their financial reports earlier than those that do not receive a clean opinion. In addition, firms with a smaller board report faster than those with a larger board. Nevertheless, there is no evidence of the influence of independent directors and type of sector on the timeliness of financial reporting. This study serves as an input to policy makers and regulators in formulating policies and strategies with respect to the timeliness of financial reports.

Highlights

Timeliness of financial reports is one of the qualitative characteristics of financial reporting because determines the relevancy of the information and influences the decisions made by the users and beneficiaries of financial reports
This study investigates the influence of board independence, board size, auditor's opinion, profitability and industry sector, on the timeliness of annual financial reports among Jordanian companies
14% of the companies had an audit report lag of more than 90 days. This implies that these companies would certainly exceed the deadline for submission of the financial reporting to the Amman Stock Exchange

Summary

Introduction

Timeliness of financial reports is one of the qualitative characteristics of financial reporting because determines the relevancy of the information and influences the decisions made by the users and beneficiaries of financial reports. Information of the financial reports, is required to be made available within a short period of time; otherwise, it loses some of its economic value (Al-Ajmi, 2008). In Jordan, timeliness of financial reporting has become a buzz word since many companies are late in submitting financial reports to the capital market authority. Financial information in annual reports of companies is more important than other sources of information, for example, releases in media, news conferences and forecasts by financial analysts. Companies in developing countries tend to release less information and in a less timely manner than those in developed countries (Errunza & Losq, 1985). Jordan is one of the developing countries which needs more research to be carried out in order to enhance published financial reporting and uplift the economy to a higher level in the future

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Results

Conclusion