Nexus between audit committee characteristics and audit report lag in an emerging economy: an analysis using frequentist and Bayesian regression models

Abstract

Purpose The objective of this study is to investigate the association between audit committee characteristics and audit report lag in the context of listed manufacturing companies in Bangladesh. Design/methodology/approach Data from 240 firm-year observations for 2018–2022 are collected and analyzed using both the pooled-ordinary least squares (OLS) model with panel corrected standard errors (PCSE) and the Bayesian regression model. The results are explained in line with the agency theory and resource dependence theory. Findings The study reveals that audit committee size, gender diversity and expertise are negatively and significantly associated with audit report lag. The results remain consistent using the lag model, which indicates that the current year’s audit committee can have an impact on the subsequent year’s audit report lag. Research limitations/implications The study has been conducted in the context of Bangladesh and thus cannot be generalized for other countries. Practical implications The study implies that companies should form large audit committees and ensure higher participation of female members and expert members in forming such committees. Policymakers and regulators can also play roles in this regard to ensure the timely issue of audit reports. Originality/value This is one of the pioneer studies to investigate the link between audit committee characteristics and audit report lag in the context of an emerging economy like Bangladesh. This study advocates agency theory by linking audit committee characteristics to reduced information asymmetry and contributes to resource dependence theory by emphasizing their role in enhancing financial reporting timeliness.

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