Audit report lag and the cost of equity capital

Simple item page
dc.citation.volumeAhead of Print
dc.contributor.authorBhuiyan MBU
dc.contributor.authorMan Y
dc.contributor.authorLont DH
dc.date.accessioned2024-11-13T02:17:24Z
dc.date.available2024-11-13T02:17:24Z
dc.date.issued2024-10-21
dc.description.abstractPurpose This research investigates the effect of audit report lag on the cost of equity capital. We argue that an extended audit report lag reduces the value of information and raises concerns for investors, resulting in an increased cost of equity capital. Design/methodology/approach We hypothesize that audit report lag increases the firm cost of equity capital. We conduct ordinary least squares (OLS) regression analyses to examine our hypothesis. Finally, we also perform a range of sensitivity tests to examine the hypothesis and robustness of findings. Findings Using a sample of the listed US firms from 2003 to 2018, we find that firms with higher audit report lag have a higher cost of equity capital. Our findings are economically significant as one standard deviation increase in audit report lag raises 3.82 basis points of cost of equity capital. Furthermore, our results remain robust to endogeneity concerns and alternative proxies for the cost of equity capital measures. Finally, we confirm that audit report lag increases the firm cost of equity capital through increasing information asymmetry and future financial restatement as a mediating channel. Originality/value We contribute to the theoretical discussion about the role of audit report lag and investors' perceptions. Overall, our results suggest that audit report lag affects a firm cost of equity capital.
dc.description.confidentialfalse
dc.identifier.citationBhuiyan MBU, Man Y, Lont DH. (2024). Audit report lag and the cost of equity capital. Journal of Capital Markets Studies. Ahead of Print.
dc.identifier.doi10.1108/JCMS-02-2024-0008
dc.identifier.eissn2514-4774
dc.identifier.elements-typejournal-article
dc.identifier.issn2514-4774
dc.identifier.urihttps://mro.massey.ac.nz/handle/10179/71990
dc.languageEnglish
dc.publisherEmerald Publishing Limited
dc.publisher.urihttps://www.emerald.com/insight/content/doi/10.1108/jcms-02-2024-0008/full/html
dc.relation.isPartOfJournal of Capital Markets Studies
dc.rights(c) The Author/s
dc.rightsCC BY 4.0
dc.rights.urihttps://creativecommons.org/licenses/by/4.0/
dc.subjectAudit report lag
dc.subjectInformation asymmetry
dc.subjectCost of equity capital
dc.titleAudit report lag and the cost of equity capital
dc.typeJournal article
pubs.elements-id492160
pubs.organisational-groupOther
Files
Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
Published version.pdf
Size:
408.43 KB
Format:
Adobe Portable Document Format
Description:
492160 PDF.pdf
Download
License bundle
Now showing 1 - 1 of 1
Thumbnail Image
Name:
license.txt
Size:
9.22 KB
Format:
Plain Text
Description:
Download
Collections
Journal Articles