Effect of the Audit Committee on Audit Report Timeliness: An Empirical Analysis in Emerging Markets

Audit report timeliness is a critical determinant of financial reporting quality, influencing investor confidence, market efficiency, and regulatory compliance. This study investigates the effect of audit committee characteristics on audit report timeliness in the context of emerging markets, with a focus on Nigerian listed firms from 2015 to 2024. Drawing on agency theory, resource dependence theory, and signaling theory, the research hypothesizes that stronger audit committee attributes—independence, financial expertise, meeting frequency, and size—positively influence the reduction of audit report lag (ARL). Using a quantitative research design, the study employs a panel data regression model on a sample of 120 non-financial firms listed on the Nigerian Exchange Group (NGX). Data were sourced from annual reports and the NGX factbooks. The dependent variable, audit report lag, is measured as the number of days between the financial year-end and the audit report date. Independent variables include audit committee independence (proportion of independent directors), expertise (proportion with accounting/finance qualifications), meeting frequency (annual meetings), and size (number of members). Control variables encompass firm size, profitability, leverage, auditor type, and industry effects. Ordinary Least Squares (OLS), Fixed Effects (FE), and Random Effects (RE) models were estimated, with the Hausman test favouring the FE model. Post-estimation diagnostics included tests for multicollinearity (VIF < 2.5), heteroskedasticity (Breusch-Pagan), autocorrelation (Wooldridge), and normality (Shapiro-Wilk). Results reveal a significant negative relationship between audit committee independence (β = -12.45, p < 0.01), expertise (β = -10.33, p < 0.01), and meeting frequency (β = -8.67, p < 0.05) and ARL, indicating that robust committees accelerate audit completion. Committee size showed an insignificant effect (β = -1.23, p > 0.10). Robustness checks using GMM and quantile regression confirmed the findings. Theoretically, the study extends agency theory by demonstrating how audit committees mitigate information asymmetry through proactive oversight. Emp findings align with global studies (e.g., Abbott et al., 2012; Sultana et al., 2015) but highlight contextual nuances in emerging markets, such as regulatory enforcement gaps. Practically, the research offers actionable recommendations: (1) Regulators should mandate at least 70% independent members and biennial financial literacy training; (2) Firms should schedule a minimum of six audit committee meetings annually; (3) Audit committees should integrate digital tools (e.g., data analytics) to streamline audit processes. Limitations include the focus on non-financial firms and potential endogeneity, addressed via instrumental variables. Future research should explore Big Data analytics and ESG factors in audit timeliness. This study underscores the pivotal role of audit committees in enhancing financial reporting efficiency, with policy implications for strengthening corporate governance frameworks in developing economies.