Audit Report Timeliness Before and During the COVID-19 Pandemic: Evidence from the Market Reaction

Description	Total
All listed firms in the IDX as of 2020 with audited financial statements	716
Less: firms in the financial industries	(95)
Less: new listing firms during 2018–2020	(151)
Less: firms with non-IDR presentation in the financial statements	(79)
Less: firms without complete financial statements during 2018–2020	(51)
Total number of companies	340
Total firm-year observations during 2018–2020	1,020
Less: data outliers from observations during 2018–2020	(43)
Final observations in firm-years	977

1 Sources: IDX and S&P Global Market Intelligence.

Table 2.

Descriptive statistics

Variable	Median	Mean	Standard deviation	Minimum	Maximum
CAR	0.2832	2.8348	9.1412	−2.3455	91.6957
UE	0.0001	0.0038	0.1565	−1.9196	1.8267
ARLD	87	97.2036	35.9895	29	330
ARL	4.4659	4.5156	0.3474	3.3672	5.7990
Assets (millions, IDR)	2,316,065	9,975,840	2.76e+07	3,266	3.52e+08
Size	14.6553	14.6636	1.7849	8.0913	19.6790
LEV	0.7373	1.2276	3.0730	−19.5617	39.0320
Grow	0.0032	0.0146	0.6570	−2.6167	8.5745
Loss	0	0.3275	0.4695	0	1
Big4	0	0.2620	0.4399	0	1
COVID	0	0.3439	0.4752	0	1

1 Note: The table shows STATA (version 15.0) output results.

1 ARL, audit report lag; ARLD, Audit report lag in days; Big4, Big Four audit firms; CAR, cumulative abnormal return; COVID-19, coronavirus disease 2019; Grow, sales growth; IDR, Indonesian Rupiah LEV, leverage; UE, unexpected earnings.

Table 3.

Correlation analysis

Variable	CAR	UE	ARL	Size	LEV	Grow	Loss	Big4	COVID
CAR	1.0000
UE	0.0543* 0.0899	1.0000
ARL	0.1092*** 0.0006	0.0069 0.8289	1.0000
Size	−0.0122 0.7038	0.0054 0.8671	0.2038*** −0.0000	1.0000
LEV	−0.0579* 0.0705	0.0111 −0.7300	0.0088 −0.7846	0.0001	0.1278***	1.0000
Grow	0.0341 0.2865	0.1252*** −0.0001	0.0143 −0.6543	0.0479 0.1350	−0.0113 0.7243	1.0000
Loss	−0.0147 0.6457	0.0328 0.3050	0.3111*** 0.0000	−0.2570*** 0.0000	0.1117*** 0.0005	−0.0989*** 0.0020	1.0000
Big4	0.0534* 0.0956	0.0127 0.6924	0.1474*** −0.0000	0.4159*** 0.0000	0.0438 0.1718	0.0186 0.5614	−0.1282*** 0.0001	1.0000
COVID	−0.2058*** 0.0000	0.1738*** 0.0000	0.1896*** 0.0000	0.0054 0.8653	0.0307 0.3375	−0.2018*** 0.0000	0.1651*** 0.0000	0.0345 −0.2813	1.0000

1 Notes: *** and * denote significant results at 1% and 10% levels, respectively.

1 The table shows STATA (version 15.0) output results.

1 ARL, audit report lag; Big4, Big Four audit firms; CAR, cumulative abnormal return; COVID-19, coronavirus disease 2019; Grow, sales growth; LEV, leverage; UE, unexpected earnings.

Table 4.

Hypothesis H1 testing result

Model 1
Independent variable	Dependent variable: CAR
Independent variable	Prediction	Coefficient	t-test	Probability
Constant	?	19.27***	5.32	0.000
UE	+	15.36	0.50	0.616
UE*ARL	−	−5.28	−1.26	0.206
UE*Size	+	0.77	0.75	0.455
UE*LEV	−	−0.24	−1.45	0.148
UE*Grow	+	0.63	0.97	0.333
UE*Loss	−	3.84	0.85	0.394
UE*Big4	+	14.71	0.82	0.411
ARL	−	−2 84***	−4.85	0.000
Size	+	−0.26**	−1.97	0.049
LEV	−	−0.16**	−2.50	0.013
Grow	+	0.67	1.56	0.120
Loss	−	0.32	0.52	0.604
Big4	+	1.12	1.42	0.157
F-value		3.88
Probability > F		0.0000
R-squared		0.0351
Adjusted R-squared		0.0220
n		977

1 Notes: *** and ** denote significant results at 1% and 5% levels, respectively, with two-tailed tests.

1 The table shows STATA (version 15.0) output results.

1 ARL, audit report lag; Big4, Big Four audit firms; CAR, cumulative abnormal return; Grow, sales growth; LEV, leverage; UE, unexpected earnings.

Table 5.

Hypothesis H2 testing result

Model 2
Independent variable	Dependent variable: CAR
Independent variable	Prediction	Coefficient	t-test	Probability
Constant	?	21.35***	4.66	0.000
UE	+	150.17*	1.84	0.067
UE*ARL	−	−33.44*	−1.88	0.060
UEARLCOVID	−	36.60*	1.69	0.092
UE*COVID	−	−184.07*	−1.76	0.079
ARL*COVID	−	2.61***	2.88	0.004
UE*Size	+	1.29	1.08	0.279
UE*LEV	−	−0.47	−1.48	0.139
UE*Grow	+	2.33	1.35	0.178
UE*Loss	−	3.07	0.73	0.466
UE*Big4	+	17.34	1.26	0.208
ARL	−	−3.16***	−3.62	0.000
COVID	−	−15.85***	−3.79	0.000
Size	+	−0.22*	−1.69	0.090
LEV	−	−0.01	−0.12	0.907
Grow	+	−0.03	−0.07	0.943
Loss	−	0.54	0.88	0.380
Big4	+	0.85	1.08	0.279
F-value		5.48
Probability > F		0.0000
R-squared		0.0933
Adjusted R-squared		0.0772
n		977

1 Notes: *** and * denote significant results at 1% and 10% levels, respectively, with two-tailed tests.

1 The table shows STATA output results.

1 ARL, audit report lag; Big4, Big Four audit firms; CAR, cumulative abnormal return; COVID-19, coronavirus disease 2019; Grow, sales growth; LEV, leverage; UE, unexpected earnings.

References

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Articles in this issue

DOI: https://doi.org/10.2478/minib-2023-0004 | Journal eISSN: 2353-8414 | Journal ISSN: 2353-8503

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Language: English, Polish

Page range: 49 - 70

Submitted on: Jan 3, 2023

Accepted on: Feb 23, 2023

Published on: Apr 11, 2023

Published by: ŁUKASIEWICZ RESEARCH NETWORK – INSTITUTE OF AVIATION

In partnership with: Paradigm Publishing Services

Keywords:

audit report lag,

audit report timeliness,

earnings response coefficient,

stock return,

COVID-19,

Indonesia

JEL:

M41,

M42

Related subjects:

Business and economics,

Business management,

Marketing, sales, customer relations,

Management, organization, corporate governance,

Business development, change management, cooperation,

Key competences in scholarly research

© 2023 Jesslyn Yen, Antonius Herusetya, published by ŁUKASIEWICZ RESEARCH NETWORK – INSTITUTE OF AVIATION
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Volume 47 (2023): Issue 1 (March 2023)