CORPORATE GOVERNANCE AND AUDIT REPORT LAG IN NIGERIA ABSTRACT This study is motivated by a desire to examine the corporate governance and audit report lag. In light of the empirical review and other discussions, a number of questions arose as to whether there is positive relationship between corporate governance and audit report lag. Using the Ordinary Least Square (OLS) regression technique with the aid of a computer software, the empirical findings revealed among other things that, the board independence, board size, positively related and statistically significant to audit report lag. Recommendations were however made by the researcher. TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION 1.1 Background to the Study 1.2 Statement of Research Problem 1.3 Research Questions Research Objectives 1.5 Research Hypotheses 1.6 Scope of the Study 1.7 Significance of the Study 1.8 Limitations of the Study CHAPTER TWO: LITERATURE REVIEW Introduction Review of Literature on Variables Review of Previous Studies Theoretical Framework CHAPTER THREE: RESEARCH METHODOLOGY 3.1 Introduction 3.2 Research Design 3.3 Population of the Study 3.4 Sources of Data 3.6 Data Analysis Method 3.7 Model Specification CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION Data Analysis and Presentation CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION Introduction Summary of Findings Discussion of Findings Recommendations Conclusion Bibliography Appendix CHAPTER ONE INTRODUCTION 1.1 BACKGROUND TO THE STUDY One of the important objectives of corporate reporting is to provide information that will assist external users in decision making. This information, however is required to be made available within a short period of time from the end of the reported period; otherwise, it loses some of its economic value. Therefore, timeliness of reports is recognized by the accounting profession, users of accounting information, and regulatory and professional agencies as an important characteristic of financial accounting information. According to Hashim and Rahman (2011), financial reporting in general will provide useful information and assist users in decision making, users rely on the audited financial reports in their assessment and evaluation of companies’ performance. The audited financial reports will increase its reliability and users will feel affirm on the reports verified by the auditor and would be able to make decision wisely. Transparency is a very important component of financial reporting. Companies must disclose anything that might influence the investment decision of an informed investor. Nothing of consequence may be hidden. This rule is widespread and pervasive: stock exchange require it. Government agencies require it. Various accounting rulemaking bodies require it, including the Financial Accounting Standards Board in the United Stated and the International Accounting Standards Board. McGee and Yuan (2008), one aspect of transparency is timeliness. According to them, it is better to disclose information sooner rather than later, although there are some tradeoffs. For example, companies that issue their annual reports on January 1 are extremely timely but there is a certain probability that some of the information in that report is not as complete or accurate as would be the case if the company had spent more time preparing the statements and had issued them a few weeks or months later. Long audit report lag i.e. the number of days from fiscal year end to audit report date, or inordinate audit delay, jeopardizes the quality of financial reporting by not providing timely information to investors. Delayed disclosure of auditor’s opinion on the true and fair view of financial information asymmetry and increase the uncertainty in investment decisions. Consequently, this may adversely affect investor’s confidence in the capital market. Givoly and Palmon (1982) assert that audit delay is the single most important determinant of timeliness in earnings announcement, which in turn, determines the market reaction to earnings announcement. Against this backdrop, the research intends to evaluate the relationship corporate governance and audit report lag in Nigeria. 1.2 STATEMENT OF RESEARCH PROBLEM There is no doubt that in recent years, an avalanche of companies both private and public limited companies published their audited financial statements as stipulated in CAMA (2004) as amended (which is minimum of 180 days). But suffice it to mention that these audited financial statements are published much later than necessary. The question that proceeds from the foregoing is whether the delay in the disclosure of the audit report will enable the investors to take informed and timely investment decisions. 1.3 RESEARCH QUESTIONS The questions of this study are: Is there any relationship between audit committee size and audit report lag? Is there any relationship between audit committee independence and audit report lag? Is there any relationship between duality of CEO and audit report lag? Is there any relationship between board size and audit report lag? Is there any relationship between board independence and audit report lag? RESEARCH OBJECTIVES To examine the relationship between audit committee size and audit report lag. To ascertain the relationship between audit committee independence and audit report lag. To find out the relationship between duality of CEO and audit report lag. To determine the relationship between board size and audit report lag. To ascertain relationship between board independence and audit report lag. 1.5 RESEARCH HYPOTHESES The following hypotheses have been formulated to serve as a base for this research; There is a significant relationship between audit committee size and audit report lag. There is a significant relationship between audit committee independence and audit report lag. There is a significant relationship between duality of CEO and audit report lag. There is a significant between board size and audit report lag. There is a relationship between board independence and audit report lag 1.6 SCOPE OF THE STUDY The research study focuses on corporate governance and audit report lag in Nigeria. The population of the study consists of all the 260 quoted companies in the Nigeria Stock Exchange, while some quoted companies is randomly selected as the sample size. The time frame of this study is one (1) year i.e. (2011) during which these companies have witnessed some delays in audit. 1.7 SIGNIFICANCE OF THE STUDY It is expected that this study would consolidate existing literature on the issues surrounding the relationship between corporate governance and audit report lag in Nigeria. The study would also facilitate the examination of the effects of corporate governance and audit report lag and thus boosting the empirical evidence from Nigeria. Furthermore, given the empirical nature of the study, the outcome of this study would aid policy makers and regulatory bodies in economic modeling and policy simulation with respect to the selected variable examined in the study. The result of the study would be of benefits to investment analysts, investors and corporations in examining the effectiveness of corporate governance and audit report lag. It will also be useful in stimulating public discourse given the dearth of empirical researches in this area from emerging economic like Nigeria. Finally, it would also add to the available literature on the area of study while also providing a platform for other researchers who may want to further this study. 1.8 LIMITATIONS OF THE STUDY Smallness of sample size: It is interesting to emphasize that the findings of this empirical research are not to be generalize for all industry, since our limited to a number of companies. The ability of obtain a completely random sample. Imprecise measurement of variables. Inappropriate test statistic.
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