HOW DOES AUDIT COMPLEXITY AFFECT AUDIT REPORT LAG? EMPIRICAL EVIDENCE FROM INDONESIAN PUBLICLY LISTED COMPANIES

Abstract

This study aims to examine the effect of audit complexity, as reflected in industry type, number of subsidiaries, and business segmentation differences, on audit report lag. In addition, this study investigates whether audit quality moderates the relationship between audit complexity and audit report lag. This study employs a quantitative research approach using secondary data obtained from audited annual financial statements of companies listed on the Indonesia Stock Exchange (IDX) during the 2013–2023 period. The sample consists of 79 companies included in the IDX80 index, resulting in 869 firm-year observations. The data were analyzed using panel data regression analysis with SPSS 25. The findings indicate that companies operating in the financial industry tend to experience shorter audit report lag compared to non-financial companies. In contrast, companies with a larger number of subsidiaries tend to have longer audit report lag. Furthermore, companies with similar business segmentation between parent companies and subsidiaries tend to experience shorter audit report lag than companies with different business segmentation. The results also reveal that audit quality, proxied by Big Four auditors, significantly reduces audit report lag in financial companies. However, audit quality does not significantly moderate the relationship between the number of subsidiaries and audit report lag, nor the relationship between business segmentation differences and audit report lag. This study contributes to the audit report lag literature by examining audit complexity through multiple dimensions, namely industry type, number of subsidiaries, and business segmentation differences, while also incorporating audit quality as a moderating variable in the Indonesian context.