Rosnita Rosnita

THE ROLE OF GOVERNANCE SUPERVISION ON DELAYS IN AUDIT REPORTS OF COMPANIES LISTED ON THE INDONESIAN STOCK EXCHANGE

Introduction

The role of governance supervision on delays in audit reports of companies listed on the indonesian stock exchange. Investigate how corporate governance (audit committee, board) impacts audit report delays for companies on the Indonesian Stock Exchange (IDX). Analyzes factors like independence, size, expertise, and diligence.

Abstract

The research aims to investigate the effect of corporate governance and audit report lag. The independent variables of this research are audit committee size, audit committee independence, audit committee expertise, audit committee diligence, board size, board independence, and board diligence. With control variables in the form of company size, profitability, gender, and the type of auditor. As well as the dependent variable to be examined is audit report lag. The study used samples from non-financial companies that have annual reports and complete financial reports from 2017 to 2021, namely 2,020 data from 404 companies listed on the Indonesia Stock Exchange (IDX). The collection of samples in this study used a purposive sampling method. The data studied is the company's annual financial statements that have been audited. Data were analyzed using logistic regression analysis, where some of the variables is a dummy variable. The results of the study prove that the variables of audit committee independence, board size, board independence, board diligence, profitability, and type of auditor have a significant positive effect on audit report lay, while the variables of audit committee size, audit committee diligence, and gender have a negative effect but not significant to audit report lag. Meanwhile, other variables such as expertise of the audit committee and firm size have a non-significant positive effect on audit report lag.    

Review

This study capably addresses a pertinent issue within corporate finance and governance: the factors influencing delays in audit report issuance among Indonesian listed companies. By focusing on the supervisory role of corporate governance mechanisms, the research aims to unravel the complexities underlying audit report lag, a critical indicator of market efficiency and information timeliness. The investigation is structured around a comprehensive set of independent variables related to audit committee characteristics (size, independence, expertise, diligence) and board characteristics (size, independence, diligence), alongside relevant control variables such as company size, profitability, gender, and auditor type. This broad scope promises to provide valuable insights into the multi-faceted nature of audit report timeliness in an emerging market context. The methodology employed in this research appears robust, drawing on a substantial dataset of 2,020 firm-year observations from 404 non-financial companies listed on the Indonesia Stock Exchange between 2017 and 2021. The use of purposive sampling for data collection from audited annual financial statements ensures the relevance and quality of the input. The choice of logistic regression analysis is appropriate, particularly if "audit report lag" is operationalized as a binary outcome (e.g., delayed vs. on-time reporting), which is implied by the selection of this statistical technique, especially with the inclusion of dummy variables. The five-year period provides a reasonable temporal scope for observing trends and relationships, enhancing the study's generalizability within the Indonesian market. The findings present a mixed yet insightful picture regarding the impact of governance supervision on audit report lag. Significant positive effects were identified for audit committee independence, board size, board independence, board diligence, profitability, and auditor type, suggesting these elements play a crucial role in either contributing to or mitigating delays. Conversely, variables such as audit committee size, audit committee diligence, and gender exhibited a negative but non-significant impact, while audit committee expertise and firm size showed a non-significant positive effect. These results indicate that not all aspects of governance supervision equally influence audit timeliness, providing important nuances for regulators, companies, and investors. The study's contribution lies in empirically substantiating which specific governance attributes are most consequential in the Indonesian setting, even for those variables where no significant relationship was found.

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