Corporate governance and the timeliness of audited financial statements: the case of Kenyan listed firms
Corporate governance and the timeliness of audited financial statements: the case of Kenyan listed firms
Purpose: the nature of corporate governance (CG) mechanisms in an entity may influence the timeliness of the audited annual report. We argue that the “quality” of CG in a firm has a significant association with the time it takes the audited annual report and financial statements to be released.
Design/methodology/approach: using a set of 543 firm-year observations over the period 2007 – 2016, we examine whether a validated CG-Index is associated with audit report delay (ARD). We employ both granular as well as aggregated approaches to the analyses. In addition, we include control variables known to have an association with ARD in the panel data regressions.
Findings: our findings, which are robust for self-selection among other checks, reveal that financial expertise in the audit committee, board size, board meetings and independence in the board are associated with longer ARDs. Some CG attributes such as board diversity (i.e., women and different nationalities in the board) are associated with improved timeliness of the annual reports. The results also reveal that a longer tenure for independent directors in the board is associated with a shorter ARD. Overall, we find that the composite CG score has a positive influence on the timeliness of annual reports.
Limitations: the study focuses on listed companies in one developing country. Additional studies focusing on other jurisdictions could yield more results.
Practical implications: the study is useful in highlighting those CG characteristics firms should focus on towards the attainment of timely corporate reporting to aid in decision making by users.
Originality/value: the study is unique since it emphasizes the importance of focusing on an aggregate CG-Index, and the contribution of the CG-Index towards the timeliness of annual reports.
Corporate governance, audit report delay, annual report, board diversity, Kenya
Mathuva, David Mutua
aaa1f36a-ee66-4a36-b16a-97870d6fe90e
Tauringana, Venancio
27634458-b041-4bc1-94da-3e031d777e4f
Owino, Fredrick J. Otieno
71263d3a-0a94-49df-9390-70b591895ef6
Mathuva, David Mutua
aaa1f36a-ee66-4a36-b16a-97870d6fe90e
Tauringana, Venancio
27634458-b041-4bc1-94da-3e031d777e4f
Owino, Fredrick J. Otieno
71263d3a-0a94-49df-9390-70b591895ef6
Mathuva, David Mutua, Tauringana, Venancio and Owino, Fredrick J. Otieno
(2019)
Corporate governance and the timeliness of audited financial statements: the case of Kenyan listed firms.
Journal of Accounting in Emerging Economies.
(doi:10.1108/JAEE-05-2018-0053).
Abstract
Purpose: the nature of corporate governance (CG) mechanisms in an entity may influence the timeliness of the audited annual report. We argue that the “quality” of CG in a firm has a significant association with the time it takes the audited annual report and financial statements to be released.
Design/methodology/approach: using a set of 543 firm-year observations over the period 2007 – 2016, we examine whether a validated CG-Index is associated with audit report delay (ARD). We employ both granular as well as aggregated approaches to the analyses. In addition, we include control variables known to have an association with ARD in the panel data regressions.
Findings: our findings, which are robust for self-selection among other checks, reveal that financial expertise in the audit committee, board size, board meetings and independence in the board are associated with longer ARDs. Some CG attributes such as board diversity (i.e., women and different nationalities in the board) are associated with improved timeliness of the annual reports. The results also reveal that a longer tenure for independent directors in the board is associated with a shorter ARD. Overall, we find that the composite CG score has a positive influence on the timeliness of annual reports.
Limitations: the study focuses on listed companies in one developing country. Additional studies focusing on other jurisdictions could yield more results.
Practical implications: the study is useful in highlighting those CG characteristics firms should focus on towards the attainment of timely corporate reporting to aid in decision making by users.
Originality/value: the study is unique since it emphasizes the importance of focusing on an aggregate CG-Index, and the contribution of the CG-Index towards the timeliness of annual reports.
Text
Manuscript _ Corporate Governance and ARL_ 27 03 2019
- Accepted Manuscript
More information
Accepted/In Press date: 1 June 2019
e-pub ahead of print date: 19 July 2019
Keywords:
Corporate governance, audit report delay, annual report, board diversity, Kenya
Identifiers
Local EPrints ID: 432048
URI: http://eprints.soton.ac.uk/id/eprint/432048
ISSN: 2042-1168
PURE UUID: fee2538b-a507-4d66-9f5d-914a87029887
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Date deposited: 27 Jun 2019 16:30
Last modified: 16 Mar 2024 07:57
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Author:
David Mutua Mathuva
Author:
Fredrick J. Otieno Owino
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