Do family ownership and supervisory board characteristics influence audit report lag? A view from a two-tier board context

Emita Astami, Agus Joko Pramono, Rusmin Rusmin, Fitra Roman Cahaya*, Teerooven Soobaroyen

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This study investigates the impact of family ownership and supervisory board characteristics on audit report lag in Indonesia. The study relies on a balanced panel dataset and matched-pair sample of 124 listed non-financial firms (2017–2019) in a two-tier board context, drawing on Type II agency theory and the entrenchment/alignment implications of ownership concentration. First, we find a positive and significant association between family ownership and audit report lag. Second, we find evidence that the size of the supervisory board (locally referred to as the board of commissioners) and the frequency of meetings are negatively associated with audit report lag. Further analyses reveal that firms with a larger proportion of family members on the supervisory board experience longer reporting lag. This finding highlights the family’s entrenchment and their domination of the board of commissioners. Additional analysis considering the commissioners’ backgrounds reveals that audit report timeliness worsens when there is a larger proportion of community leadership. This suggests that some commissioner profiles could further lead to entrenchment behaviors. Our findings contribute to the literature and to policy by highlighting the potential and limits of a two-tier board policy on accounting outcomes, particularly in the context of dominant family structures in emerging economies.
Original languageEnglish
Article number100638
Number of pages17
JournalJournal of International Accounting, Auditing and Taxation
Volume56
Early online date28 Jun 2024
DOIs
Publication statusPublished - Sept 2024

Bibliographical note

Copyright © 2024 The Author(s). Published by Elsevier Inc. This is an open access article under the CC BY license (https://creativecommons.org/licenses/by/4.0/).

Data Access Statement

Data will be made available on request.

Keywords

  • Family ownership
  • corporate governance
  • audit report lag
  • Indonesia
  • Two-tier board structure
  • Emerging economies

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