Zalailah Salleh

CEO characteristics and audit report timeliness: do CEO tenure and financial expertise matter?

Purpose - – This paper aims to hypothesise that demographic characteristics of managers play a significant role in performing their duties amongst which is financial reporting. This study aims to examine whether CEO characteristics, namely, tenure and financial expertise, are associated with audit report timeliness. Design/methodology/approach - – Data from companies listed on the Oman capital market between 2007 and 2011 and three proxies for audit report timeliness are used. Findings - – CEO tenure and CEOs with financial expertise are reported to be associated with timely audit reports. Supplementary tests also confirmed this result. In addition, it is suggested and documented that there is an interaction effect between CEO tenure and financial expertise concerning the timeliness of audit reports. The use of a two-stage least square analysis also supported the main results. Research limitations/implications - – Hypotheses were tested using data from Oman with a relatively small sample size. Therefore, only a few characteristics of the CEO were considered and a more sophisticated approach of testing managers’ effect on company policies was unable to be used. In addition, the generalisability of the study findings should be made carefully. Originality/value - – This paper differs from prior studies, in that it extends the audit report timeliness literature by examining whether the CEO tenure and CEOs with financial expertise are associated with audit report timeliness. Findings demonstrate that CEO characteristics are important factors for a timely audit report.

Audit committee involvement in resolving contentious accounting issues: perceptions of chief financial officers, audit committee chairs and external auditors in Malaysia

This paper reports the results of a survey of chief financial officers, audit committee chairs, and external auditors of Malaysian publicly listed companies to elicit their perceptions of the involvement of audit committees in resolving contentious accounting issues. A total of 98 usable responses were received. In general, we find that issues arise on a regular basis, with the main reason for contention being that the issue involves judgement or subjective evaluation. The audit committee is involved when the issue is very material. Respondents agree that the audit committee does help to resolve disputed issues, using various techniques including listening to the parties, making recommendations and raising queries. However, we find some differences in perceptions of the three respondent groups about the frequency of contentious issues and the extent of audit committee involvement. Auditors perceive that disputes occur less frequently while audit committee chairs perceive greater audit committee involvement compared to the other two respondent groups.

Audit Committee Financial Expertise and Audit Report Lag: Malaysia Further Insight

Recent audit and financial reporting quality research suggest that audit committee financial expertise is a crucial ingredient for high quality financial reports. However, Malaysian literature has reported no association between audit committee financial expertise and audit report timeliness. Using audit report lag, we examined whether Malaysian audit committee financial expertise is relevant for financial reporting timeliness. Using data from 2005 to 2011 from the top 100 Malaysian companies and the fixed effects panel data approach, we find that audit committee financial expertise is not significantly associated with audit report lag proxies. We further examined this issue with the basic premise that audit committee independence enhances the role of audit committee financial expertise. However, the interaction between these mechanisms shows an insignificant association. Additional investigation reveals that these results are driven by the lack of independence on Malaysian boards. We also find evidence suggesting that neither a large number of subsidiaries nor the quality of financial reporting sufficiently justify the recent Malaysian reforms relating to the financial reporting timeframe.