Timeliness of financial statements : the case of Malaysian listed industrial product companies

Abstract

The timeliness of corporate annual financial reports is a crucial factor which affects the usefulness of information that is made available to external users, especially investors. The purpose of this study is to study corporate governance and performance in Malaysian public listed companies as key contributors to the timeliness of financial statements as few past studies have also included performance as an explanatory variable for timeliness. In Malaysia, the public depends on the financial statements submitted to Bursa Malaysia previously known as Kuala Lumpur Stock Exchange (KLSE) in order to make sound business decision so directors should provide shareholders with timely information. This study takes the industrial product sector and the annual reports of companies operating therein and a list of submission date of annual report to Bursa Malaysia by Malaysian public listed companies for data analysis. Regression analyses were performed to examine the relationship between corporate governance and company’s performance using ROA and ROE which will eventually affect the timeliness submission of the annual report to KLSE. In this study, it is proven that out of the variables discussed, CEO duality and independent audit committee have a significant relationship with timeliness of financial reporting. Practitioners may use this finding to develop mechanisms that can ensure companies will abide with timeliness guidelines regardless of CEO duality and independent audit committee issues faced by companies. Most companies in Malaysia only submit within the statutory requirement required by the Bursa Malaysia to avoid being delisted and to maintain its public image. Out of the chosen data, 8.8% of the sample companies in Malaysia submit early within the statutory requirement while the remaining 91.2% submit timely within the statutory requirement.