The Effect of Earnings Volatility on the Audit Report Lag, Considering the Role of the Audit Quality

Résumé

Timely issuance of financial statements by companies is one of the important dimensions of financial reporting that plays a key role in the capital market and investor decisions. Delays in the audit report endanger the quality of information due to failure to provide timely information to shareholders. Earnings volatility, which is one of the time series characteristics of earnings quality, is caused by several factors. More volatility leads to higher risk. In the present study, the effect of audit quality on the severity of the effects of earnings volatility and the delay of the audit report of companies listed on the Tehran Stock Exchange has been done. To analyze the research data and hypotheses, a sample of 132 companies listed on the Tehran Stock Exchange was selected by systematic removal method in the period 2013 to 2019. Data analysis was performed using multivariate regression model and hybrid data. The results show that earnings volatility have a positive effect on audit report lag. In other words, the more earnings volatility, the longer the audit report lag. Audit quality also reduces the effect of earnings volatility on audit report lag. That is, the higher the quality of the audit, the less the effect of earnings volatility on the delay of the audit report.

Keywords: Audit Quality, Earnings volatility, Audit Report Lag