The impact of audit committee effectiveness on timeliness of reporting: Indonesian evidence

Abstract

The objective of this study is to examine the effect of audit committee effectiveness on timeliness of reporting. Specifically, the study investigates whether there is any association between effectiveness of an audit committee and submission of audited financial statements to Indonesia Stock Exchange. Audit committee effectiveness is measured by an index based on the framework developed by DeZoort et al. (2002). The index includes 10 requirements related to aspects of structure, membership, independence, job duties, and disclosure of audit committee in company annual reports. The sample comprises 76 late-filing and a matched pair of 76 timely-filing listed companies in 2008. Logistic regressions analysis indicates that timeliness of reporting is associated with listed companies’ audit committee effectiveness and audit completion time. Further analysis also indicates that among the aspects in the audit committee effectiveness index, audit committee meetings and the presence of a clear mandate (detail explanation) defining the responsibilities of audit committee in the audit committee report decrease the likelihood of late-filing behavior.