Ownership structure and audit report lag of Saudi listed firms: A dynamic panel analysis

Figures & data

Figure 1. Research framework.

Table 1. Sample selection procedure

Description	No. of firms
Total population of the study	198
Less: financial companies	42
Companies with substantial missing data	22
Firms listed after 2012 and those that merged within the period under review	32
Sample size	102

Table 2. Sample distribution

Sector	No. of firms	Percentage (%)
Materials	39	38.24
Energy	1	0.98
Consumer durable	3	2.94
Retailing	4	3.92
Health	5	4.91
Consumer services	4	3.92
Capital goods	7	6.86
Foods retailing	4	3.92
Utilities	2	1.96
Foods and beverages	12	11.76
Telecommunications	4	3.92
Transport	5	4.91
Life sciences	1	0.98
Real estate	9	8.82
Media	2	1.96
Total	102	100

Table 3. Measurement of the variables

	ACRONYM	Measurement	Expected sign
Dependent variable:
Audit report lag	ARL	The number of days between the accounting year end of a firm and the external auditors’ report date.
Independent variables:
Managerial ownership	MO	The number of common stock owned by managers over total shares.	+
Family ownership	FO	The number of family shares over total common stock.	+
Government ownership	GO	The number of equity shares owned by the government over total shares.	+
Institutional ownership	IO	The number of equity shares held by institutions over the total equity shares.	_
Control variables:
Audit committee size	ACS	The number of audit committee members.	+
Audit committee independence	ACI	The number of independent directors in the audit committee over total audit committee members.	_
Auditor type	AT	If a firm is audited by Big 4 equals 1, otherwise, 0.	_
Profitability	ROA	Operating profits divided by total assets.	_
Firm size	FS	The logarithms of the sampled firms’ total assets.	_
Leverage	LEV	Total debts over total assets	_

Table 4. Descriptive analysis

Variable	Mean	Std. Div.	Min.	Max.	Observations
ARL	55.37	10.05	10.00	126.00	1,020
MO	0.02	0.09	0.00	0.66	1,020
FO	0.13	0.19	0.00	0.95	1,020
GO	0.11	0.18	0.00	0.90	1,020
IO	0.08	0.19	0.00	0.80	1,020
ACS	3.49	0.67	3.00	5.00	1,020
ACI	0.53	0.16	0.17	0.80	1,020
AT	0.55	0.49	0.000	1.00	1,020
ROA	0.06	0.09	−0.64	0.75	1,020
FS	9.37	0.77	7.29	14.04	1,020
LEV	0.22	0.19	0.00	0.78	1,020

Notes: ARL = audit report lag, MO = managerial ownership, FO = family ownership, GO = government ownership, IO = institutional ownership, ACS = audit committee size, ACI = audit committee independence, AT = auditor type, ROA = return on assets, FS =firm size and LEV = leverage.

Table 5. Correlation results

Variable	ARL	MO	FO	GO	IO	ACS	ACI	AT	ROA	FS	LEV
ARL	1.000
MO	0.084^b	1.000
FO	−0.059^c	−0.035	1.000
GO	0.011	−0.202^a	−0.096^a	1.000
IO	0.047	−0.067^b	−0.054^c	−0.044	1.000
ACS	0.166^a	−0.108^a	−0.012	0.264^a	0.008	1.000
ACI	−0.008	0.070^b	0.016	0.037	0.111^a	0.129^a	1.000
AT	0.017	0.086^a	−0.015	0.229^a	0.005	0.126^a	0.056^c	1.000
ROA	−0.711^a	0.044	0.047	−0.016	0.025	−0.007	0.014	0.118^a	1.000
FS	0.078^b	−0.024	−0.077^b	0.587^a	0.122^a	0.341^a	0.094^a	0.415^a	0.033	1.000
LEV	0.075^b	0.043	−0.008	0.133^a	0.126^a	0.049	0.060^c	0.219^a	−0.148^a	0.377^a	1.000

a, b & c indicate significance at 1%,5% and 10%, respectively.

Notes: ARL = audit report lag, MO = managerial ownership, FO = family ownership, GO = government ownership,IO = institutional ownership, ACS = audit committee size, ACI = audit committee independence, AT = auditor type, ROA = return on assets, FS =firm size and LEV = leverage.

See Table 3 for the measurements of these variables.

Table 6. Main regression results (2-step system GMM)

Variable	Coefficient/standard error
ARLi,t−1	0.2480 (0.0280) ***
Managerial ownership	4.8206 (1.0475) ***
Family ownership	−17.5566 (4.8439) ***
Government ownership	−5.1283 (4.994)
Institutional ownership	−3.4194 (1.6277) **
Audit committee size	2.6393 (0.1683) ***
Audit committee independence	−3.6768 (0.2232) *
Auditor type	−1.3024 (0.5560) **
Return on assets	−82.5849 (2.991) ***
Firm size	3.3930 (3.9213)
Leverage	11.8072 (4.6721) **
Sargan statistics	0.4675
AR (1) test (p-value)	0.009
AR (2) test (p-value)	0.2142
Number of groups	102
Number of instruments	38
Year dummies	Yes
Firm effects	Yes
Industry effect	Yes

Notes: This table presents the regression results on the relationship between ownership structure and audit report lag using the 2-step system GMM.

*,** & *** show significance level @ 1%, 5% and 10%, respectively.

The numbers in parentheses are standard errors robust to heteroscedasticity.

See Table 3 for the definitions of the variables.

Table 7. Regression results for robustness check (2-step system GMM)

Variable	Coefficient/standard error
LOGARLi,t−1	0.1877 (0.0294) ***
Managerial ownership	0.0399 (0.0181) **
Family ownership	−0.2574 (0.0743) ***
Government ownership	0.1536 (0.0968)
Institutional ownership	−0.0481 (0.0127) ***
Audit committee size	0.0203 (0.0013) ***
Audit committee independence	−0.0246 (0.0111) **
Auditor type	0.0036 (0.0026)
Return on assets	−0.6108 (0.2650) **
Firm size	0.0862 (0.1097)
Leverage	0.1085 (0.0581) *
Sargan statistics	0.3569
AR (1) test (p-value)	0.002
AR (2) test (p-value)	0.1192
Number of groups	102
Number of instruments	38
Year dummies	Yes
Firm effects	Yes
Industry effect	Yes

Notes: *,** & *** show significance level @ 1%, 5% and 10%, respectively.

Notes: The numbers in parentheses are standard errors robust to heteroscedasticity.

See Table 3 for the definitions of the variables.