Board Independence, Board Diligence, Board Expertise and Impact on Audit Report Lag in Malaysian Market

22 Pages Posted: 1 Dec 2010 Last revised: 5 Apr 2011

See all articles by Ummi Junaidda Hashim

Ummi Junaidda Hashim

UniSZA

Rashidah Abdul Rahman

Universiti Teknologi MARA (UiTM) - Bureau of Research and Consultancy (BRC)

Date Written: November 1, 2010

Abstract

This paper examines the association between corporate governance mechanisms and audit report lag among 288 companies listed at Bursa Malaysia for a three year period from 2007 to 2009. It examines on one of the corporate governance mechanisms, namely board of directors’ characteristics. Three characteristics of board of directors are examined namely, board independence, board diligence and board expertise. These characteristics are used to examine their effectiveness in assuring timeliness of audit report. In this study, audit report lag refers to the number of days from the company’s year end (financial year) to the date of auditor’s report. Based on the analysis, the results of this study show that audit report lag for the listed companies in Malaysia ranges from 36 days to 184 days for the three year period. The results of this study show that there are significant negative relationships between board diligence with audit report lag. This study found that the number of meetings held by the board of directors in a company is able to reduce audit report lag. A higher number of meetings being held indicated the board is discharging their roles towards the company. This study however could not provide any evidence on the link between board independence and board expertise on audit report lag.

Keywords: Board independence, board diligence, board expertise

Suggested Citation

Hashim, Ummi Junaidda and Rahman, Rashidah Abdul, Board Independence, Board Diligence, Board Expertise and Impact on Audit Report Lag in Malaysian Market (November 1, 2010). Finance and Corporate Governance Conference 2011 Paper. Available at SSRN: https://ssrn.com/abstract=1717479 or http://dx.doi.org/10.2139/ssrn.1717479

Ummi Junaidda Hashim (Contact Author)

UniSZA ( email )

Kampus Gong Badak
Kuala Terengganu, 20400
Malaysia

Rashidah Abdul Rahman

Universiti Teknologi MARA (UiTM) - Bureau of Research and Consultancy (BRC) ( email )

40450 Shah Alam
Malaysia
+03 55442090 (Phone)

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