Research On Relationship Between Audit Firm Characteristics And Audit Report Lag

As one of the basic characteristics of accounting information quality, timelinesshas significant impact on relevance and decision usefulness of accounting information.The value of accounting information will decrease as its timeliness decreases. Theimprovement of accounting information timeliness can help to reduce the degree ofinformation asymmetry between information users, reduce the agency cost, reduce thechance of insider trading and reduce the information users’ uncertainty ofdecision-making. And this can improve the efficiency of their decision-making.However, the timeliness of listed companies’ annual reports hasn’t had substantialimprovement since the establishment of our country’s capital market. The statutoryperiod for disclosure of annual reports has always been120days.Audit report lag is thought to be the most important factor that affects thetimeliness of financial report. In this study, we base on financial reports disclosured byA share listed companies of the Shanghai and Shenzhen Stock Exchange between2009to2011.We empirically test the relationship between audit firm characteristics andaudit report lag in order to understand the factors that affect the timeliness of financialreports better.The empirical results show that: The relationship between audit firm size andaudit report lag is not significant. Audit firm change and audit opinion are significantlypositive correlated with audit report lag. Audit firm industry market share issignificantly positive correlated with audit report lag. The higher the industry marketshare, the longer the audit report lag. Audit firm industry portfolio share is negativecorrelated with audit report lag, but not significant. Thus we can’t have conclusion onthe effect of audit firm industry specialization on audit report lag. At the same time, wefind that: company size and loss are also significantly positive correlated with auditreport lag. Unexpected earnings, return on assets and ownership concentration aresignificantly negative correlated with audit report lag.