Abstract
Purpose – Timely reporting is an important dimension of useful accounting information for financial decision-making. This paper focuses on Audit Report Lag (ARL). It examines whether there is an association between (1) Extraordinary Items (EI) and ARL, (2) Financial Distress Level (FDL) and ARL, and (3) whether the relationship between EI and ARL is moderated by financial distress.
Design/methodology/approach – This archival study examines listed Malaysian firms from 2016 to 2020, using Ordinary Least Square (OLS) regression on 1,826 firm-year observations. The analysis involves ARL as the dependent variable, with EI and FDL as independent variables.
Findings – Results show significant positive associations between EI and ARL, as well as between financial distress and ARL. Notably, the positive association between EI and ARL weakens for firms with strong financial conditions, aligning with expectations.
Research limitations/implications – Caution should be exercised when attempting to generalise the results to other countries and periods.
Originality/Value - Based on the available literature and review, this is the first study investigating the association between EI, FDL, and ARL in Malaysia.