ISSN: 2222-6990
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This study examines the effect of auditor tenure and industry specialization on financial reporting timeliness. Using evidence from the corporate report of public listed companies in Malaysia, the results from multivariate regression analysis show that audit firm tenure and industry specialization are associated with financial reporting timeliness. The findings show that audit tenure is positively associated with a timelier financial reporting, indicating a shorter audit period. This evidence is consistent with the knowledge spillover arguments. The results also indicate that industry specialist is linked with less timely financial reporting, in which the appointment of industry specialist would result in a longer period to complete audit, probably because a large number of clients to be handled. The result is robust even after including various controls namely auditor size, audit fees, audit committee size, CEO duality, financial year end, firm size, leverage, and growth. The evidence suggests that financial reporting timeliness can be improved by retaining incumbent auditor and selecting a non-industry specialist. This study contributes to the existing literature on the role of auditor in providing timely financial reports. The results of this study are useful for regulators in Malaysia as an input for their effort in setting the rules and regulation relating to auditor tenure to enhance the relevance of corporate reports produced by publicly listed firms.
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In-Text Citation: (Ismail et al., 2022)
To Cite this Article: Ismail, W. A. W., Hashim, M. H., Tjahjadi, B., & Kamarudin, I. R. (2022). Timeliness of Financial Reporting: The Examination of Auditor Tenure and Industry Specialization. International Journal of Academic Research in Business and Social Sciences, 12(1), 385–395.
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