The impact of audit committee effectiveness on audit report lag : evidence from UAE

Abstract

The objective of this study is to investigate the audit report lag (ARL) in the United Arab Emirates (UAE) and the impact of the audit committee’s effectiveness on the ARL. The characteristics of the audit committee studied include the size of audit committee, its expertise and the audit committee meetings. The study will test whether there is a link between the characteristics of an audit committee and the ARL. The ARL is measured by the number of days between the date of the financial year end and the date of the audit report. The agency theory is applied to explain the hypotheses in this study. The sample of study consist of 149 listed companies on the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) for three years from 2011 to 2013. The regression analysis is performed to investigate the ARL determinants. The results show that the ARL is influenced by the size of audit committee, auditor type and firm profitability. However, no evidence is found to support the effect of the expertise of the audit committee, audit committee meetings, firm size and industry type on ARL. Detailed explanation of the results with its implications, limitations and suggestions for future research are also addressed.