Abnormally Long Audit Report Lag and Future Stock Price Crash Risk: Evidence from China

38 Pages Posted: 31 Oct 2017

See all articles by Ahsan Habib

Ahsan Habib

Massey University - School of Accountancy; Massey University

Hedy Jiaying Huang

School of Accountancy, Albany Campus

Multiple version iconThere are 2 versions of this paper

Date Written: October 30, 2017

Abstract

This paper examines the association between abnormally long audit report lag and future stock price crash. Audit report lag is defined as the period between a company’s fiscal year end and the audit report date, and is informative about audit efficiency. Although a substantial body of literature investigates the determinants of audit report lag, scant empirical evidence exists on the consequences of audit report lag. Using data from Chinese listed companies we find evidence that abnormally long audit report lag increases the risk of a future stock price crash. We further document that this adverse consequence is more pronounced for firms with a poor internal control environment. Our research contributes to the literature on audit report lag, stock price crash risk and the effectiveness of internal control.

Keywords: Abnormally Long Audit Report Lag, Stock Price Crash Risk, Internal Control, China

JEL Classification: G10, G12, M41, M42

Suggested Citation

Habib, Ahsan and Huang, Hedy Jiaying, Abnormally Long Audit Report Lag and Future Stock Price Crash Risk: Evidence from China (October 30, 2017). Available at SSRN: https://ssrn.com/abstract=3062264 or http://dx.doi.org/10.2139/ssrn.3062264

Ahsan Habib (Contact Author)

Massey University - School of Accountancy ( email )

Auckland
New Zealand

Massey University ( email )

Auckland
New Zealand

Hedy Jiaying Huang

School of Accountancy, Albany Campus ( email )

Auckland
New Zealand

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