Evidence on the Relation between Managerial Ability and Financial Reporting Timeliness

12 Pages Posted: 22 Jun 2018

See all articles by John L. Abernathy

John L. Abernathy

Kennesaw State University

Thomas R. Kubick

University of Nebraska-Lincoln

Adi Masli

University of Kansas - School of Business

Date Written: July 2018

Abstract

While prior research has investigated the relation between firm‐level attributes and financial reporting timeliness, there is little evidence on whether managerial ability is associated with financial reporting timeliness. We examine the relation between managerial ability and financial reporting timeliness. Managers with higher ability possess greater human capital and are better able to maintain the systems and controls underlying the company's financial information. We therefore predict that managers with higher ability produce more timely financial disclosures. We find that, incremental to firm‐level attributes, higher managerial ability is associated with a shorter earnings announcement lag, a shorter audit report lag, and a lower probability of a late US Securities and Exchange Commission filing. Collectively, our results suggest that managerial ability has a positive influence on the timeliness of financial reporting.

Keywords: Audit report lag, earnings announcement lag, financial reporting timeliness, human capital, managerial ability, SEC filing

Suggested Citation

Abernathy, John L. and Kubick, Thomas R. and Masli, Adi, Evidence on the Relation between Managerial Ability and Financial Reporting Timeliness (July 2018). International Journal of Auditing, Vol. 22, Issue 2, pp. 185-196, 2018, Available at SSRN: https://ssrn.com/abstract=3200743 or http://dx.doi.org/10.1111/ijau.12112

John L. Abernathy (Contact Author)

Kennesaw State University ( email )

1000 Chastain Road
Kennesaw, GA 30144
United States

Thomas R. Kubick

University of Nebraska-Lincoln ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Adi Masli

University of Kansas - School of Business ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States

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