Audit Report Timeliness Before and During the COVID-19 Pandemic: Evidence from the Market Reaction

Yen Jesslyn and Herusetya Antonius ()
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Yen Jesslyn: Faculty of Economics and Business, Universitas Pelita Harapan, Lippo Village, MH Thamrin Boulevard 1100, Klp. Dua, Kec. Klp. Dua, Kota Tangerang, Banten, Indonezja
Herusetya Antonius: Faculty of Economics and Business, Universitas Pelita Harapan, Lippo Village, MH Thamrin Boulevard 1100, Klp. Dua, Kec. Klp. Dua, Kota Tangerang, Banten, Indonezja

Marketing of Scientific and Research Organizations, 2023, vol. 47, issue 1, 49-70

Abstract: This study investigates the market response to the timeliness of audit reports, specifically before and during the coronavirus disease 2020 (COVID-19) pandemic. We use the earnings response coefficient (ERC) as our proxy to assess the market reaction to the timeliness of audit reports. We applied the purposive sampling method to all companies listed on the Indonesia Stock Exchange (IDX), except for the financial industry, and obtained 977 firm-year observations as our final sample. Using linear multiple regression models in our analysis, we discovered no indication of a market response to the timeliness of audit reports for our full sample during 2018–2020. However, we find evidence that during the COVID-19 pandemic in 2020, the market reacted more positively to the audit report timeliness compared to the pre-COVID-19-pandemic period. Our results indicate that investors were more tolerant of delayed audit reports during the COVID-19 pandemic due to the increased audit efforts and longer time needed to gather sufficient evidence to issue audit reports.

Keywords: audit report lag; audit report timeliness; earnings response coefficient; stock return; COVID-19; Indonesia; opóźnienia raportów audytowych; aktualność raportów audytowych; współczynnik zarobków w odpowiedzi na zysk; zwrot z akcji; COVID-19; Indonezja (search for similar items in EconPapers)
JEL-codes: M41 M42 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:mosaro:v:47:y:2023:i:1:p:49-70:n:6

DOI: 10.2478/minib-2023-0004

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