The Relevance of audit report lag and its corporate governance determinants among listed companies in the East African Community States
Gacheru, Grace Wanjiku
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The objective of this study is to establish the relevance of audit report lag and its corporate governance determinants among listed companies in East Africa. Descriptive statistics were used to compare the different audit report lags in Kenya, Uganda, Tanzania, and Rwanda and to establish the relevance of ARL in investment making decisions. Pooled regressions were performed to identify the significant corporate governance factors in listed companies in East Arica. This study focused on a ten-year period from 2007 to 2016. The findings revealed that of the four countries Rwanda had the shortest average ARL, 86 days while Tanzania had the longest average, 103 days. The most significant corporate governance factors in Kenya were, gender diversity in the board of directors, frequency of audit committee meetings and the auditor type. In Uganda, the most significant corporate governance factor was the audit committee financial expertise while in Tanzania, the board size and auditor type were the most significant. There were no significant corporate governance factors influencing audit report lag in Rwanda. The analysis of Primary data revealed that most investors rely on published financials for investment decisions, suggesting that ARL could be relevant for investment making decisions. Further analysis of information collected from the questionnaires revealed that the competence of the clients’ finance team, completeness and quality of information provided to auditors and the type of the audit report (qualified or unqualified) highly influenced ARL. There is need for academic scholars to extend this research by examining other factors influencing ARL in East Africa. The various regulators and policymakers are invited ensure strict adherence to the codes of corporate governance to achieve high standards of governance in listed companies. The boards of directors’, management and external auditors are encouraged to focus on prompt financial reporting because investors in East Africa highly rely on published financial reports to make investment decisions. This study acts the foundation for future research by providing empirical evidence on the relevance of audit report lag and its corporate governance determinants among listed companies in East Africa.