Do audit committee characteristics improve audit report timeliness: Evidence from an emerging economy

The purpose of this study is to examine the impact of audit committee characteristics on audit report lag (ARL) among firms listed on the Palestine Stock Exchange in an emerging market environment. Another significant aspect of accounting information quality is timely audit reporting since information is not as useful and relevant for stakeholders if it isn't reported on time. The study is based on agency theory, resource dependence theory and signaling theory and focuses on the two types of structural characteristics of audit committees (size, independence and frequency of meetings) and capability-based characteristics (financial expertise, ownership and multiple directorships). The study employs panel data derived from the annual reports of 30 listed firms and, thus, has a balanced sample of 150 firm-year observations. The timeliness of audit reports is determined based on the average of audit report lag, which is calculated as the number of days between the fiscal year-end and the audit report date. The hypotheses were tested using a random-effects panel regression model. The results indicate that audit committee financial expertise and multiple directorships are positively associated with audit report lag, indicating longer reporting delays. The levels of independence of audit committee (IC), frequency of audit committee meetings (ICF) and ownership (ICO) do not have significant effects. The overall findings indicate that simply having formal governance institutions does not help to enhance timeliness of reporting in weak-enforcement settings.