Introduction
One of the of import issues affects the seasonableness of the fiscal statements which convey fiscal information to investors is the seasonableness of the audit studies ( Dopuch et al. , 1986 ; Field and Wilkins 1991 ; Loudder et al. , 1992 ) . The fiscal information seasonably revelation through audited fiscal statements plays an of import function in cut downing the asymmetric airing of fiscal information ( Jaggi & A ; Tsui, 1999 ) .
Indeed, the shorter the clip between the terminal of the accounting twelvemonth and the publication day of the month, the greater the benefits that can be derived from the fiscal statement. The hold in circulating the fiscal statement is most likely to hike uncertainness associated with the determinations made based on the information contained in the fiscal statements. Therefore, the determination may non be of greatest quality ( Abdulla, 1996 ) .
It has been found by many empirical and analytical groundss that the seasonableness of fiscal statement has some impacts on the houses ‘ value ( Beaver, 1968 ; Givoly and Palmon, 1982 ; Chamber and Penman, 1984 ; and Kross and Schroeder, 1984 ) . Such as, Beaver ( 1968 ) asserted that investors may prorogue their purchases and gross revenues of securities until the net incomes study is released. Givoly and Palmon ( 1982 ) contended that the monetary value reaction to the revelation of early net incomes proclamations was significantly more marked than the reaction to late proclamations.
In a similar mode, the investors would likely seek for an alternate beginning of information. The delayed airing of fiscal information may promote certain unscrupulous investors to get dearly-won private pre-disclosure information and work their private information at the disbursal of ‘less informed ‘ investors ( Bamber, Bamber, and Schaerbeek, 1993 ) .
Issue on audit study hold should be given attending. This is to match with the Saudi authorities ‘s inspiration to do this state the top 1 in the Middle East pulling the foreign investing and promoting the local companies to affect in the free market schemes. For this thing, with the rapid development of the planetary markets and their demands, there is no alibi for listed Saudi companies to handle such development and alterations as non-essential events, particularly in fiscal statements revelation.
Problem Statement
In position of the fact that seasonableness is an of import qualitative property of fiscal statements, which requires information to be made available to the users every bit quickly as possible. The addition in the coverage hold reduces the information content and the relevance of the paperss. The acknowledgment that the length of audit may be the individual most of import determiner impacting the timing of net incomes proclamation ( Whittred, 1980 ; Givoly and Palmon, 1982 ; and Carslaw and Kaplan, 1991 ) . In such of import issues related to the fiscal statements ‘ seasonableness, this survey attempts to look into the determiners of audit hold for companies listed on Saudi Arabia Stock Exchange ( Tadawel ) , a developing capital market, supplying farther grounds on the factors of audit hold in Saudi Arabia. This survey extends the old surveies by concentrating on the Saudi Arabia puting with more recent information.
Research Questions
In general, this survey seeks for account on how Saudi listed companies ‘ external hearers delay in publishing their audit studies. Specifically, the undermentioned research inquiries would be addressed in this survey:
1. What is the audit study detaining position among Saudi listed companies ‘ external hearers?
2. What are the factors that determine the length of clip the Saudi listed companies ‘ external hearers require to finish their audit studies?
3. How do the undermentioned factors influence the Saudi listed companies ‘ external hearers to detain publishing their audit studies?
a ) Company size.
B ) Audit house engineering.
degree Celsius ) Subsidiaries.
vitamin D ) Extraordinary points.
vitamin E ) Audit sentiment.
degree Fahrenheit ) Sign of income.
g ) Debt proportion.
1.4 Research Aims
The general aim of this survey is to derive utile penetrations on audit hold determiners among Saudi listed companies. Specifically, the survey tries to accomplish the undermentioned three aims:
To place the audit study detaining position among Saudi listed companies ‘ external hearers.
To place the factors that determine the length of clip the Saudi listed companies ‘ external hearers take to finish their audit studies.
To analyze if there is any relationship between company size, audit house engineering, subordinates, extraordinary points, audit sentiment, mark of income, and debt proportion with the audit study hold.
Significance of the Study
Issue on audit study hold in non conclusive. Although there are several surveies have been conducted in different developed and developing states, there are still a figure of states that have non been tapped to look into the determiners of the audit study hold. This survey is considered the first survey carry oning the determiners of audit study hold among listed companies in Saudi Stock Exchange. Furthermore, this survey will be conducted under the Saudi concern environment, unlike the other surveies that have been conducted under different concern environments. But still this survey will acquire benefit from the variables in the old surveies that are relevant to the developing capital markets such as company size, audit house engineering, subordinates, extraordinary points, audit sentiment, mark of income, and dept proportion. Therefore, this survey may widen the bing literature in explicating the audit study hold in Saudi Arabia.
Scope and Restrictions of the Study
This survey has been conducted with several restrictions such as:
The survey is conducted merely among public listed companies that are runing in Saudi Stock Exchange. These companies are focussed due to the handiness and handiness of informations to be collected.
Although a sufficient figure of companies to be included in the sample size can be obtained, the existent figure of companies that would be used in the analysis may be smaller. This is because the size of the sample depends on the questionnaires returned by the well-thought-of companies. In other words, non all companies chosen will return or to the full complete the questionnaires given.
Used in this survey reflects the audit work from the year-end to the audit study day of the month. Audit work conducted outside this period has non been considered in the analysis.
Audit study slowdown is measured in footings of yearss instead than man-hours spent on audit work. This could make a measuring job if audit houses spend more than a normal twenty-four hours ‘s work on the audit.
be other factors, such as administrative blessing procedure with the place office, which affects ARL and have non been included in the theoretical account
Integrating corporate administration features into the analysis ( e.g. quality and independency of direction and board rank ) might cast more visible radiation on the construction and kineticss of the audit study slowdown.
The above- mentioned restrictions have narrowed down the range of the research and hopefully, the end product consequence could be utile.
Organization of the Study
This balance of the research proposal is divided into four chapters. The following chapter, Chapter 2, provides a reappraisal of related literature about audit study hold determiners. Chapter 3 emphasized on the research methodological analysis, which begins with theoretical model, hypotheses development, theoretical account specification, variable measuring and informations aggregation. Chapter 4 presented the empirical findings and consequences obtained from the questionnaire, cogency analysis, dependability analysis and multivariate logistic arrested development. Finally, chapter provides the treatment and deductions of the survey every bit good as suggestions and recommendations for future research.
Chapter TWO
LITERATURE REVIEW
Introduction
This Chapter discusses and summarizes the literatures on all variables under survey. The first portion of this chapter discusses on audit study hold. The literatures are arranged harmonizing to dependent variable and independent variables. The dependent variable i.e company size is discussed foremost. The remainder of the chapter summarizes all the independent variables. There are seven independent variables involve in the survey.
Audit Report Delay
The timely publication of companies ‘ fiscal information depends on the clip taken to finish the audit. The audit study hold is a peculiarly critical factor in emerging and freshly developed capital markets where the audited fiscal statements in the one-year study are the lone dependable beginning of information available to investors ( Leventis et al, 2005 ) .
Establishing the assurance of investors requires dependable and timely accounting information. In emerging capital markets, the audited fiscal statements in the one-year study are likely to be the lone dependable beginning of information available to the market. There is necessarily a spread between the terminal of the fiscal twelvemonth and the airing of the audited fiscal statements but minimising that spread would heighten market efficiency. Regulators need to understand the causes of the audit study hold before they can pass efficaciously to cut down it.
Audit study slowdown is a job that crosses frontiers but old research has focused mostly on developed capital markets ( Walker & A ; Johnson, 1996 ) . Subsequently, Timeliness of fiscal statements is the focal point of an increasing sum of attending by accounting research workers and regulative organic structures ( Knechel & A ; Payne, 2001 ) . Directors are expected to prefer a minimum audit study hold ( Johnson, 1998 ) . Hearers are expected to execute confidence services without slowdowns, within the restraints imposed by professional codifications and moralss. The issue of timely coverage has received attending in US markets with the proclamation of phased decreases in describing clip bounds from 90 yearss after the fiscal twelvemonth terminal to 60 yearss by 2005 ( SEC, 2002 ) .
The surveies that have been conducted to analyze audit slowdown for companies in the US are ( Givoly & A ; Palmon, 1982 ; Ashton et al. , 1987 ; Bamber et al. , 1993 ; Kinney & A ; McDaniel, 1993 ; Schwartz & A ; Soo, 1996 ; Henderson & A ; Kaplan, 2000 ; Knechel & A ; Payne 2001 ) , Canada ( Newton & A ; Ashton, 1989 ; Ashton et Al. , 1989 ) , Australia ( Davies & A ; Whittred, 1980 ) , New Zealand ( Courtis, 1976 ; Carslaw & A ; Kaplan, 1991 ) and France ( Soltani, 2002 ) . The lone surveies that could be regarded as researching emerging or freshly developed capital markets relate to Hong Kong ( Ng & A ; Tai, 1994 ; Jaggi & A ; Tsui, 1999 ) , Zimbabwe ( Owusu-Ansah, 2000 ) , Bahrain ( Abdulla, 1996 ) and Pakistan ( Hossain & A ; Taylor, 1998 ) . In general these surveies use public sphere informations ; exclusions are Ashton et Al. ( 1987 ) and Knechel and Payne ( 2001 ) who were given entree to scrutinize houses ‘ informations. All the above surveies have provided empirical grounds that audit seasonableness is the most influential factor in the seasonableness of fiscal statements ( Owusu-Ansah, 2000 ) .
Company Size
Most of the old surveies found a negative association between the audit hold and the company size. This is perchance due to strong internal control and the ability to force per unit area hearers to finish the audit work in a timely mode ( Carslaw and Kaplan, 1991 ; Courtis, 1976 ; Davies and Whittred ; Givoly and Palmon, 1982 ; Newton and Ashton, 1989 ; Ashton et Al, 1989 ; Bamber et Al, 1993 ; Schwartz and Soo, 1996 ; Jaggi and Tsui, 1999 ; Owusu-Ansah, 2000 ) . Furthermore, larger companies have more resources to pay comparatively higher audit fees and are able to settle the fees shortly after the companies ‘ year-end. Therefore, it is likely that the audit-reporting slowdown for larger companies is lesser than those of smaller 1s. ( Dyer and McHugh, 1975 ) argued that the direction of larger companies has greater inducements to cut down both audit hold and coverage hold since they are closely monitored by investors, trade brotherhoods and regulative bureaus. This larger external force per unit area forces them to describe on a timely manner. Therefore, anterior research workers have argued that to cut down the uncertainness about public presentation that may cut down the portion monetary value, the larger houses tend to finish their audit work every bit shortly as possible to let go of the one-year studies ( Davies and Whittred, 1980 ; Ashton et al. , 1989 ; Carslaw and Kaplan, 1991 and Abdulla, 1996 ) .
Audit Firm Technology
There are few literatures found sing audit house engineering and its relationship with the audit study hold. Newton and Ashton, ( 1989 ) ; Schwartz and Soo, ( 1996 ) found that there is a positive relationship between audit house engineering with structured audit attack hold let go ofing the audit study longer than the unstructured audit attack. The old survey done by Bamber et Al. ( 1993 ) developed a comprehensive ARL theoretical account to analyze the impact of different variables on audit holds for a sample of US companies. The theoretical account covers three the variable ‘audit house engineering ‘ which is reflected by the audit attack, structured or unstructured. It was found that the audit house engineering significantly affects the audit study hold, intending that the structured audit houses took a longer clip to scrutinize than the unstructured 1s. Therefore, based on Bamber et Al ( 1993 ) grounds Jaggi and Tsui ( 1999 ) conducted a survey of Hong Kong companies based on a sample of 393 Hong Kong companies for the 1991- 1993 period. The consequence of their survey showed that companies audited by audit houses utilizing the structured audit attack have longer audit holds.
Subordinates
There are few literatures found sing the figure of subordinates and its relationship with the audit study hold. Jaggi and Tsui ( 1999 ) conducted a survey of Hong Kong companies based on a sample of 393 Hong Kong companies for the 1991- 1993 period. The consequence of their survey showed that companies have larger figure of subordinates take longer audit holds than the 1s have smaller figure of subordinates. On the other manus, Ng and Tai ( 1994 ) found that there is no relationship between the figure of subordinates and the audit study hold.
Extraordinary Items
Several anterior surveies have included extraordinary points as a map of audit hold. ( Newton and Ashton, 1989 ; Carslaw and Kaplan, 1991 and Bamber et Al, 1993 ; Schwartz and Soo, 1996 ) . Carslaw and Kaplan ( 1991 ) found that extraordinary points were positively associated with audit hold. This is likely because the hearer may necessitate extra clip to place whether a peculiar dealing falls within the scope of extraordinary point or a mere exceeding point since the differentiation between them is someway obscure.
2.7 Audit Opinion
Several old surveies found that Companies non having unqualified audit sentiments are expected to hold a longer audit hold compared to the 1s having an unqualified ( clean ) study. Whittred ( 1980 ) found that ‘subject to ‘ making took extra period to do their one-year studies public. Carslaw and Kaplan ( 1991 ) ; Ashton et Al. ( 1987 ) and Newton and Ashton ( 1989 ) ; Bamber et Al. ( 1993 ) , Soltani ( 2002 ) besides included audit sentiment as a map of audit hold probe. Whereas, Jaggi and Tsui ( 1999 ) conducted a survey of Hong Kong companies based on a sample of 393 Hong Kong companies for the 1991- 1993 period. The consequence of their survey do non back up the findings of earlier surveies that qualified audit sentiments and companies describing losingss will hold longer audit holds.
Sign of Income
There are few literatures found sing mark of income and the audit study hold. Ashton et al. , ( 1987 ) stated that the mark is an indicant of good or bad intelligence ensuing from a twelvemonth ‘s activity. Carslaw and Kaplan ( 1991 ) claimed that a company confronting a loss would necessitate the hearer to schedule their audit in order to get down the audit subsequently than usual. By making so, there would be a hold in conveying the bad intelligence to the populace. Conversely, companies holding higher profitableness may necessitate the audit to be completed every bit rapidly as possible in order to rapidly let go of the good intelligence. They besides argued that hearers are more cautious during the audit procedure in response to a company loss if the hearer believes that the company ‘s loss increases the likeliness of fiscal failure or direction fraud.
2.9 Debt proportion
The old survey done by Carslaw and Kaplan ( 1991 ) resulted that Debt proportion as a map of audit hold was the first survey introduced. They have argued that the comparative proportion of debt to entire assets may be declarative of the fiscal wellness of the company. A high proportion of debt to entire assets will increase a company ‘s likeliness of failure and may raise in the hearer ‘s head extra concerns that the fiscal statements may be less dependable than normal. This is because a high proportion of debt is usually associated with high hazard. It may ensue from hapless fiscal wellness that could take to mismanagement and the possibility of fraud. Furthermore, a high proportion of debt may take to liquidness or traveling concern job which requires more probationary audit. In this survey, the entire liabilities refer to the amount of current liabilities and long-run liabilities
Chapter THREE
RESEARCH DESIGN AND METHODOLOGY
Introduction
The first subdivision of this chapter discusses the theoretical model followed by hypotheses development, theoretical account specification, variable measuring, informations aggregation and consequences of the
Theoretical Model
The clip spent to fix the audit is the factor finding the seasonably published fiscal information. The audit study hold is a peculiarly of import factor in emerging and freshly developed capital markets where the audited fiscal statements in the one-year study are the lone dependable beginning of information available to investors ( Leventis et al, 2005 ) .
The degree of dependable and timely accounting information available is the same degree of assurance the investors build. In other words, every bit much as the investors set up assurance is every bit much as dependable and timely accounting information available. In emerging capital markets, the audited fiscal statements in the one-year study are likely to be the lone dependable beginning of information available to the market. There is necessarily a spread between the terminal of the fiscal twelvemonth and the airing of the audited fiscal statements but minimising that spread would heighten market efficiency. Regulators need to understand the causes of the audit study hold before they can pass efficaciously to cut down it.
Audit study hold has become a planetary job ; all the developed and developing capital markets are enduring, but old research has focused mostly on developed capital markets ( Walker & A ; Johnson, 1996 ) . Several surveies have provided empirical grounds that audit seasonableness is the most influential factor in the seasonableness of fiscal statements ( Owusu-Ansah, 2000 ) .All the same, Timeliness of fiscal statements is the focal point of an increasing sum of attending by accounting research workers and regulative organic structures ( Knechel & A ; Payne, 2001 ) . Directors are expected to prefer a minimum audit study hold ( Johnson, 1998 ) . Hearers are expected to execute confidence services without slowdowns, within the restraints imposed by professional codifications and moralss. The issue of timely coverage has received attending in US markets with the proclamation of phased decreases in describing clip bounds from 90 yearss after the fiscal twelvemonth terminal to 60 yearss by 2005 ( SEC, 2002 ) .
This research tries to look into the effects of seven variables on factors that influence the seasonableness of audit study. Those variables are company size, audit house engineering, subordinates, extraordinary points, audit sentiment, mark of income, and dept proportion. Whereas, the dependant variable is audit study hold. Figure 3.1 below shows the theoretical model theoretical account.
Hypothesiss Development
Dependent Variable
Audit study hold is the dependent variable. For the ground that the audited fiscal statements are the lone dependable beginning of information available to construct assurance for the fiscal statements ‘ users, the audit study hold has become a critical factor in the developed and developing capital markets ( Leventis et al, 2005 ) .
Presently, all the empirical and analytical surveies have yet provided grounds that audit study hold is the most significant influential factor in the fiscal statements seasonableness ( Owusu-Ansah, 2000 ) . In the same line, the increasing demands of dependable information in the capital markets has led to an increasing sum of attending by accounting research workers and regulative organic structures of the seasonableness of fiscal statements ( Knechel & A ; Payne, 2001 ) . With the realizing of audit study hold by the companies and the capital markets, companies will be able to bring forth seasonably and dependable fiscal information.
3.3.2 Independent Variable
3.3.2.1 Company Size
Entire assets are really of import to either large or little companies. The entire plus of the company is used to mensurate the company size. In this survey, the entire plus refers to the amount of current assets, fixed assets every bit good as investing and progresss. Intangible assets are besides included. The entire assets have normally been used in old surveies of audit hold to mensurate size ( Ashton et al. , 1989 ; Courtis, 1976 ; Davies and Whittred, 1980 ; Gilling, 1977 ; Newton and Ashton, 1989 ; Carslaw and Kaplan, 1991 ; and Abdulla, 1996 ) . ( Dyer and McHugh, 1975 ) found an association relationship between company size and the audit study hold that the direction of larger companies has greater inducements to cut down both audit hold and coverage hold since they are closely monitored by investors, trade brotherhoods and regulative bureaus. This larger external force per unit area forces them to describe on a timely manner. Therefore, anterior research workers have argued that to cut down the uncertainness about public presentation that may cut down the portion monetary value, the larger houses tend to finish their audit work every bit shortly as possible to let go of the one-year studies ( Davies and Whittred, 1980 ; Ashton et al. , 1989 ; Carslaw and Kaplan, 1991 and Abdulla, 1996 ) . Therefore, the first hypothesis is developed as below:
H1: There is a positive relationship between house ‘s size and audit study hold.
3.3.2.2 Audit Firm Technology
Audit house engineering refers to the structured and unstructured audit attack. . Newton and Ashton, ( 1989 ) ; Schwartz and Soo, ( 1996 ) found that there is a positive relationship between audit house engineering with structured audit attack hold let go ofing the audit study longer than the unstructured audit attack. The old survey done by Bamber et Al. ( 1993 ) developed a comprehensive ARL theoretical account to analyze the impact of different variables on audit holds for a sample of US companies. The theoretical account covers three the variable ‘audit house engineering ‘ which is reflected by the audit attack, structured or unstructured. It was found that the audit house engineering significantly affects the audit study hold, intending that the structured audit houses took a longer clip to scrutinize than the unstructured 1s. Therefore, based on Bamber et Al ( 1993 ) grounds Jaggi and Tsui ( 1999 ) conducted a survey of Hong Kong companies based on a sample of 393 Hong Kong companies for the 1991- 1993 period. The consequence of their survey showed that companies audited by audit houses utilizing the structured audit attack have longer audit holds. Because the audit house engineering influences on the audit study hold, the undermentioned hypothesis is established:
H2: There is a positive relationship between structured audit attack and audit study hold.
3.3.2.3 Subordinates
In this survey subordinate refers to the figure of subordinates the company owns. Jaggi and Tsui ( 1999 ) conducted a survey of Hong Kong companies based on a sample of 393 Hong Kong companies for the 1991- 1993 period. The consequence of their survey showed that companies have larger figure of subordinates take longer audit holds than the 1s have smaller figure of subordinates. Therefore, such consequence has motivated the undermentioned hypothesis:
H3: There is a positive relationship between figure of subordinates and audit study hold.
3.3.2.4 Extraordinary Items
The categorization of points will depend on the peculiar fortunes – what is extraordinary point for one company does non needfully be extraordinary for another company due to the differences in their ordinary activities. Capable to this, it poses important uncertainness that may take to drawn-out dialogue between the hearer and the company. However in Saudi Arabia, the SFAS defined the extraordinary points into additions or losingss from natural catastrophe and expropriation of assets merely. This survey expects a different determination compared to old surveies as a consequence of the new definition of extraordinary points. ( Newton and Ashton, 1989 ; Carslaw and Kaplan, 1991 and Bamber et Al, 1993 ; Schwartz and Soo, 1996 ) . Carslaw and Kaplan ( 1991 ) found that extraordinary points were positively associated with the audit hold. Therefore, the undermentioned hypothesis is addressed:
H4: There is a positive relationship between presence of extraordinary points and audit study hold.
Audit Opinion
In this survey, audit sentiment refers to the qualified sentiment viewed as bad intelligence and therefore slows down the audit procedure. Several old surveies found that Companies non having unqualified audit sentiments are expected to hold a longer audit hold compared to the 1s having an unqualified ( clean ) study. Whittred ( 1980 ) found that ‘subject to ‘ making took extra period to do their one-year studies public. Carslaw and Kaplan ( 1991 ) ; Ashton et Al. ( 1987 ) and Newton and Ashton ( 1989 ) ; Bamber et Al. ( 1993 ) , Soltani ( 2002 ) besides included audit sentiment as a map of audit hold probe. Hence, the undermentioned hypothesis is moderately established:
H5: There is a positive association between audit of sentiment and audit study hold.
Sign of Income
The mark of income in this survey refers to the loss or net income reported by the companies. The companies reporting losingss for the period are expected to hold a longer audit hold compared to the 1s describing a net income. Ashton et al. , ( 1987 ) stated that the mark is an indicant of good or bad intelligence ensuing from a twelvemonth ‘s activity. Carslaw and Kaplan ( 1991 ) claimed that a company confronting a loss would necessitate the hearer to schedule their audit in order to get down the audit subsequently than usual. By making so, there would be a hold in conveying the bad intelligence to the populace. Conversely, companies holding higher profitableness may necessitate the audit to be completed every bit rapidly as possible in order to rapidly let go of the good intelligence. As such, the undermentioned hypothesis is developed:
H6: There is a positive association between mark of income and audit study hold.
Debt proportion
In this survey, the debt proportion refers to the equation computed by spliting the entire liabilities by the entire plus. The entire liabilities refer to the amount of current liabilities and long-run liabilities. The first survey introduced was the survey done by Carslaw and Kaplan ( 1991 ) concluded that Debt proportion as a map of audit. In other words, they have suggested that the comparative proportion of debt to entire assets may be declarative of the fiscal wellness of the company. A high proportion of debt to entire assets will increase a company ‘s likeliness of failure and may raise in the hearer ‘s head extra concerns that the fiscal statements may be less dependable than normal. This is because a high proportion of debt is usually associated with high hazard. It may ensue from hapless fiscal wellness that could take to mismanagement and the possibility of fraud. Furthermore, a high proportion of debt may take to liquidness or traveling concern job which requires more probationary audit. Therefore, the undermentioned hypothesis is developed:
H7: There is a positive association between debt proportion and audit study hold.
Data Collection
Population
In this survey, the population frame will include all the public listed companies in Saudi Stock Exchange ( Tadawel ) . Harmonizing to Tadawel, there were 108 companies listed in both chief board and 2nd board of Saudi Stock Exchange as at 10 November 2007. Therefore, the population frame of this survey will be based on all the listed 108 companies.
Sample Selection
A sample was selected of all the listed companies in the Saudi Stock Exchange which were 108 companies due to the little sample size. However, in order to equilibrate the figure of companies in different groups of industry, all the listed companies have been taken into deeply consideration. Therefore, all the companies have been categorized into groups every bit same as the class of Tadawel as follows: fiscal sectors ( 25 companies ) , industrial sectors ( 46 companies ) , service sectors ( 28 companies ) , and agricultural sectors ( 9 companies ) .
Procedures
In this survey, informations will be collected in two ways. The first type of informations is from the primary beginning. The cyberspace could function as a primary informations beginning when questionnaires are administered over. The questionnaires will be distributed to the companies that have been chosen as a topic. A set of questionnaire will be e-mailed to each company.
Second manner is through secondary informations, where the information will be taken from the bing beginnings such as the web sites of the companies, one-year studies, articles, one-year studies, magazines, cyberspace, newspaper, authorities publications, diaries, company records or archives, doctorial thesiss every bit good as maestro ‘s thesis. While seeking for secondary informations, it will salvage clip and costs of geting information. These beginnings of secondary informations provide a batch of information for research and job resolution ( Sekaran, 2003 ) . Using the cyberspace Netscape Navigator to transport out the survey, a study of the companies ‘ web sites or place pages was conducted in order to cognize the companies entire assets and their profitableness.
Besides, the research worker has letters sent out to those companies where the web sites could non be found straight through the cyberspace. The letters were designed to happen out whether the companies have web sites on the cyberspace and their web sites references.
Measurement of Variables
Dependent Variable
3.5.1.1 Audit Report Delay ( ARD )
For the intent of this survey, the figure of yearss between the day of the month of the fiscal statement and the day of the month of the hearers ‘ study was used to mensurate the audit hold.
3.5.2 Hypothesiss Variables
3.5.2.1 Company Size ( SIZE )
Entire assets are the entire value of resources owned by concerns. The size of a company can be measured in a figure of ways, such as capital employed, turnover, figure of employees and company ‘s market value. There is no overruling theoretical ground to choose on instead than another. In this survey, the entire plus of the company is used to mensurate the company size. Therefore, the entire assets of each company will be gathered from the latest published one-year studies. The sum of fixed assets added with current assets will be to the sum of company ‘s entire assets.
Audit Firm Technology ( AUDTEC )
Audit house engineering refers to the structured and unstructured audit attack. Hearers are classified into the Big Five and the non – Large Five. The Big Five refers to Arthur Andersen, KPMG Peat Marwick, Ernst & A ; Young, Pricewaterhouse Coopers and Deloitte & A ; Touche. The Big Five audit houses are assigned 1 and the others are assigned 0.
3.5.2.3 Subordinates ( SUB )
In this survey, subordinate refers to the figure of subordinates the company owns. Companies owned big Numberss of subordinates are assigned 1 and the others are assigned 0.
3.5.2.4 Extraordinary Items ( EXTR )
In this survey, extraordinary points refer to the additions or losingss from natural catastrophe and expropriation of assets. Companies describing extraordinary points are assigned a 1, otherwise a 0.
Audit Opinion ( OPIN )
In this survey, the qualified sentiment is viewed as bad intelligence and therefore slows down the audit procedure. Type of audit sentiment, companies having other than standard or unqualified audit sentiment are assigned a 1, while others a 0.
Sign of Income ( LOSS )
In this survey, companies reporting losingss for the period are expected to hold a longer audit hold compared to the 1s describing a net income. Therefore, companies describing a loss will be assigned 1 whereas the staying will be assigned 0.
3.5.2.7 Debt proportion ( DEBT )
In this survey, the entire liabilities refer to the amount of current liabilities and long-run liabilities. The debt proportion is computed by spliting the entire liabilities by the entire plus computed above.
Model Specification and Analysis
This survey applied Multiple Logistic Regression ( MLR ) . MLR, like ordinary least square theoretical accounts for scaled informations, generalize to let for several explanatory variables. The forecasters can be quantitative, qualitative or both types. All variables were tested in the multiple logistic arrested development analysis in order to place their relationship with the audit study hold.
The undermentioned multiple arrested development theoretical account is used:
ARD = a + I?1 SIZE + I?2 AUDTEC + I?3 SUB + I?4 EXTR + I?5 OPIN + I?6 LOSS + I?7 DEBT
Where:
ARL = Natural log of figure of yearss between the client ‘s financial year-end and the audit study day of the month
SIZE = Total plus of the company
AUDTEC = Type of audit house represented by a dummy variable: companies audited by the Big Five are assigned a 1, otherwise a 0
0SUB = Number of subordinates, 1 if company owns big figure of subordinates, otherwise 0
EXTR = Extraordinary point represented by dummy variable: companies describing extraordinary point are assigned a 1, otherwise a 0.
OPIN = Type of audit sentiment, companies having other than standard or unqualified audit sentiment are assigned a 1, while others a 0.
Loss = Sign of current twelvemonth income represented by a silent person variable ; companies enduring losingss are assigned a 1, otherwise a 0.
DEBT = The proportion of debt to entire plus.
