This study aims to investigate the correlation between four major indicators of auditor quality: audit fees, auditor size, non-audit services, auditor tenure, financial reporting timeliness and publicly traded firms in the United Arab Emirates (UAE).
Total report latency (TRL) is a metric used to assess the efficiency of financial reporting. It depicts the number of days between a firm’s fiscal year-end and the date on which its annual reports are made available on the capital market website. A total of 312 observations were identified from data collected over six years (2011–2016) from non-financial companies listed on UAE capital markets, such as the Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM). The statistical methods that were implemented included descriptive statistics and multiple regressions.
The UAE data revealed that audit fees, leverage and profitability affect ARL. Nevertheless, there is a lack of empirical evidence to substantiate the impact of audit firm size, non-audit services or auditor tenure on TRL.
Based on the results, TRL is significantly reduced by audit fees alone. The substantial effort exerted by auditors to complete audit work on time, particularly when high audit fees are paid, may account for this outcome. Despite this, the scale of the audit firm, non-audit services and audit tenure could not further reduce the TRL.
The UAE capital markets are relatively recent developments. Thus, corporations might adopt a more lax approach to enforcing regulatory obligations. Local and international investors require timely audited financial statements to facilitate decision-making and dispel speculation. Determining audit quality attributes that decrease TRL is advantageous for UAE markets, investors and publicly traded companies.
