The extent of audit report lag and governance mechanisms: Evidence from Islamic banking institutions in Malaysia

Kaaroud, Mohamed Ahmed and Mohd. Ariffin, Noraini and Ahmad, Maslina (2020) The extent of audit report lag and governance mechanisms: Evidence from Islamic banking institutions in Malaysia. Journal of Islamic Accounting and Business Research, 11 (1). pp. 70-89. ISSN 1759-0817 E-ISSN 1759-0825

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Abstract

The purpose of this study is to examine the extent of audit report lag (ARL) and its association with governance mechanisms in the Islamic banking institutions in Malaysia. The extent of ARL lag is defined by the number of days from a company’s financial year-end to the signature date on its audit report. The sample of the study comprises 112 observations of Islamic banking institutions’ financial reports for the period 2008-2014. A balanced panel data analysis is performed to analyse the association between the extent of ARL and governance mechanisms. The findings show that the extent of ARL for the sample selected ranges from a minimum period of 7 days to a maximum period of 161 days which approximately two months on average. A fixed effects analysis indicates that audit committee expertise and audit committee meeting have significant association with the extent of ARL. On the other hand, board independence, audit committee size and Shari’ah board expertise have insignificant association with the extent of ARL. In addition, one control variable (Islamic bank size) is found to be significantly associated with longer ARL. The findings provide useful feedback for Malaysian policymakers on the past and current practices of financial reports and of governance mechanisms. The findings of the study would help the policymakers in monitoring the Islamic banking institutions’ compliance with financial reports submission requirements. The policymakers perhaps could relook into governance mechanisms that could reduce the extent of ARL in the Islamic banking institutions and implement regulations to strengthen them.

Item Type:	Article (Journal)
Additional Information:	1616/80466
Uncontrolled Keywords:	audit report lag, Islamic banks, Malaysia, corporate governance
Subjects:	H Social Sciences > HF Commerce > HF5001 Business. Business Administration > HF5735 Business records management H Social Sciences > HG Finance > HG1501 Banking H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences Kulliyyah of Economics and Management Sciences > Department of Accounting
Depositing User:	DR MASLINA AHMAD
Date Deposited:	22 May 2020 09:37
Last Modified:	22 May 2020 10:06
URI:	http://irep.iium.edu.my/id/eprint/80466

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