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International Journal of Research Publications

Reliability of Timeliness in Financial Reporting in Nigeria

Ehijiele Ekienabora* and Olukoya Samson Oluwoleb
Department of Business Administration, CBMS, Igbinedion University, Okada, Edo State,302110,Nigeria
Accounting Department, Stanton University, Garden Grove, USA

Abstract

The broad objective of the study is to examine corporate attributes and timeliness of financial reporting in selected quoted
companies. The specific objectives are to examine the effect of firm age, profitability and firm size on timelines. The
longitudinal research design was used for the study with an extensive reliance on secondary data retrieved from annual
reports. The sample for the study comprises of quoted firms across sectors of the Nigerian stock exchange. A sample of 40
companies from 2010-2015 was used for the study. The method of data analysis adopted is the descriptive statistics,
correlation statistics and the regression analysis. Specifically, the Generalized Least Square Regression (GLS) was
conducted. The technique is employed to provide robust insight into the subject matter. This study found the following;
firm age has no significant effect on financial reporting timelines; profitability has no significant effect on financial
reporting timelines and firm size has no significant effect on financial reporting timelines. The study recommends the
need for companies to improve the timeliness of their financial reporting. Companies should put in place measures of
reducing the time lag between the financial year end and the Annual General Meeting (AGM) in order to boost the
confidence the financial statement users have in using financial statements for decision making.

© 2018 Published by IJRP.ORG. Selection and/or peer-review under responsibility of International

Journal of Research Publications (IJRP.ORG)

Keywords: financial reporting; timeliness; reliability of timeliness; financial reporting in Nigeria

* Corresponding author. Tel.: +2340832912296.

E-mail address: ehismcman@yahoo.com.
 First Author name / International Journal of Research Publications (IJRP.ORG) 2

1. Introduction

Good accounting information is more often than not characterized by issues such as reliability, relevance,
adequacy and comparability in order for the information made accessible to be useful for decision making by
the various stakeholders that include investors and government agencies. Before, accounting information
provided can be regarded as useful in satisfying the needs of various stakeholders, the SAS (Statement of
Accounting Standards) Number 2 in Nigeria requires that accounting information should be seen as been
transparent. Transparency is a very imperative component of financial reporting. Companies must disclose
anything that might influence the investment decision of an informed investor. It is an imperative qualitative
characteristic of accounting information, and it may affect whether the information is of use to those who read
financial statements. Its significance has been stressed in the Statement of Financial Accounting (SFAC 2,
Financial Accounting Standards Board (FASB) 1976, in Delaney, Epstein, Adler, & Foran, 1997).
The main objective of financial reporting is to provide high-quality financial reporting information
concerning primarily financial in nature, economic entities, useful for economic decision-making (FASB,
1999; International Accounting Standards Board (IASB), 2008). In order to be of high quality, financial
reports should be reliable. Consequently, the reliability of financial reporting is one of the most essential
qualitative attributes of accounting practice. Financial information reliability is achieved when the information
pertaining to economic phenomenon is neutral, complete and free from material error.
Financial reports are intended to meet the needs of decision makers. Accordingly, timeliness is identified as
one of the characteristics of information in financial reporting (Belkaoui, 2002). To achieve this objective,
financial reports must be accessible on time to inform decision making (Lewis & Pendril, 1996; Mainoma,
2002). Hence, financial reports should be published as soon as possible after the end of the accounting period
(Wild, Bernstein & Subramanyam, 2001). The usefulness of financial statements is blighted if they are not
made accessible to users within a reasonable period after the reporting date. A company should be in a
position to issue its financial statements timely (Haskins, Ferris, Sack & Allen, 2005). Financial statements are
a structured representation of the financial position and financial performance of an entity. The objective of
financial statements is to provide information about the financial position, financial performance and cash
flows of an entity that is useful to a wide range of users in making economic decisions (Jenfa, 2000;
Spiceland, Sepe & Tomassini, 2008; King, Lembke & Smith, 2005; Wild, Bernstein & Subramanyam, 2001).
Timeliness is one of the features of financial reports. Therefore, the timely presentation of financial
statement to shareholders at the annual general meeting for approval and use for effective and efficient
decision-making is one of the qualitative characteristics of financial reports. Alexander and Britton (2000)
reports that information should be provided to the user in time for use to be made of it.
Turel (2010) posited that timeliness of financial statements is one of the important determinants of financial
reports. He argue that irrespective of whether one chooses to call timeliness an objective of accounting or an
attribute of useful accounting information, it is clear that both the disclosure regulations and a large part of the
accounting literature adopt the premise that timeliness is a necessary condition to be satisfied if financial
statements are to be useful. Timely financial reporting is an essential ingredient for a well-functioning capital
market. Dogan, Coskun and Celik (2007) suggest that financial information users should be able to reach
information they need in a timely manner in the case where they are in a position to make a decision or
anticipate. Within this context, timing of information is at least as important as the content of that for financial
information users. Information users consider that timing of financial reporting is an important complementary
factor of accounting information (Knechel & Payne, 2001 and Almosa & Alabbas, 2007). Undue delay in
releasing financial statements increases uncertainty associated with investment decisions (Yim, 2010 and
Aktas & Kargin, 2011).
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The increase in the delay reduces the information content and relevancy of the information. Entities should
balance the relative benefits of timely reporting with the reliability of information provided in the financial
statements (McLelland & Giroux, 2000; Afify, 2009 and Mitra & Hossain, 2009). To provide information on a
timely basis it may often be necessary to report before all aspects of a transaction or other event are known,
thus impairing reliability. Conversely, if reporting is delayed until all aspects are known, the information may
be highly reliable but of little use to users who have had to make decisions in the interim (Lambert, Brazel &
Jones, 2008). Timeliness has long been recognised as one of the qualitative attributes of general-purpose
financial reports (Almosa & Alabbas, 2007 and Aljifri & Khasharmeh, 2010).
The quality of financial reporting has remained an issue of major concern among professional accountants,
regulators and other users of financial information. This is due to the fact that financial reporting has been a
principal means of communicating the results of transactions and events which transpired within the
organization to the outsiders; who may use such information in assess the economic performance and
condition of a business as well as a guide in making economic decisions. Hence, the expectation of every user
of financial information is that such information will help them in gauging the health status of the reporting
entity and in making informed financial decisions. However, events in recent times, mainly the series of
corporate scandals (such as Enron, Worldcom and several Nigerian banks) have placed staid doubt on the
quality of financial reports circulating in our corporate environment and their capacity to meet the
expectations and needs of the users.
In Nigeria, the need for high quality and timely financial information has become predominantly
imperative due to the increasing exposure of Nigerian business organizations to international capital markets.
Thus, the business organizations are being obliged to satisfy the information demands of foreign investors and
to provide them with more timely information in annual financial reports. Recognizing the importance of
timely release of financial information, regulatory agencies and laws in Nigeria have set statutory maximum
time limits within which listed companies are required to issue audited financial statements to stakeholders
and also file such reports with relevant regulatory bodies.
Some studies have attempted to investigate the factors responsible for the delay of corporate financial
reports in Nigeria, but have based their conclusions from cross-sectorial analysis (for example Afolabi, 2007;
Fagbemi and Uadiale, 2011 and Iyoha, 2012). This study lays some concerns about the sufficiency of their
findings, thus, the need to undertake this study.

2. The Concept of Quality Financial Reporting

The main objective of financial reporting is to provide information concerning economic entity, primarily
financial in nature, useful for economic decision-making (IASB, 2008 and Van Beest, Braam & Boelen,
2009). Financial reporting provides information about the management’s stewardship; the entity’s assets,
liabilities, equity, income and expenses (including gains and losses), contributions by and distributions to
owners as well as cash flows (Van Beest, Braam & Boelen, 2009). This information is usually in the form of
annual financial statements such as the statement of financial position; the income statement or statement of
comprehensive income; statement of cash flows and statement of changes in equity as well as notes to the
accounts (IASB, 2008, 2010). To enhance reliability and confidence in the minds of the users, external
auditors subject these reports to scrutiny. However, the spate of financial scandals in recent times has casted
serious doubt on the quality of audited financial reports circulating in our corporate environment.
Thus, the concept of quality financial reporting has commanded considerable research interest around the
world. However, researchers, practitioners or regulators are in disagreement as to a clear definition of what
constitutes ‘quality financial reporting’ (Pomeroy & Thomton, 2008). SOX (2002), for instance, require audit
committees and auditors to discuss the quality of the financial reporting methods of the company, and not just
 First Author name / International Journal of Research Publications (IJRP.ORG) 4

their acceptability. However, the Act did not define what constitutes ‘quality’ in financial reporting. The IASB
(2008) has however provided a working definition of quality financial reporting. The Board in its conceptual
framework defines quality financial reporting as that which meets the objectives and the qualitative
characteristics of financial reporting (IASB, 2008; Van Beest et al., 2009).

3. Concept of Reliability

The term ‘reliability’ in relation to financial reporting is an important qualitative attribute of accounting
information. This term is vital and may influence whether the information is useful to those who read financial
statement or otherwise. The reliability of audited corporate annual financial report is considered to be crucial
and an essential factor affecting the usefulness of information made available to various users. The accounting
profession has recognized that the reliability of reports is a significant characteristic of financial accounting
information and for regulatory and professional agencies. Reliability concept is a quality of information that
assures decision makers that the information represented in the financial records captures the actual conditions
and events of the reporting entity. (Adediran, Alade & Oshode, 2013)
The FASB was the first standard setter to define the term reliability. In terms of the FASB Concepts
Statement No. 2 (FASB, 1980) the reliability of a measure rests on the faithfulness with which it represents
what it purports to present (representation faithfulness), coupled with an assurance for the user, which comes
through verification, that it has that representational quality (verifiability). In Contrast, the IASB Framework
states that information has the quality of reliability when it is free from material error and bias and can be
depended upon by users to represent faithfully which it either purports to represent or could reasonably be
expected to represent. In the IASB Framework, five characteristics are included under the concept of
reliability: faithful representation, substance over form, neutrality, prudence and completeness. (Adediran et
al., 2013)

4. The Concept of timeliness in financial reporting

The term 'timeliness', in relation to financial reporting, is an important qualitative attribute of accounting
information. This term is vital and may influence whether information is useful to those who read financial
statements or otherwise. Its significance has been stressed out in the Statement of Financial Accounting
(SFAC 2, FASB 1976, in Delaney et al., 1997). The timeliness of audited corporate annual financial reports is
considered to be a crucial and an essential factor affecting the usefulness of information made available to
various users (Almosa et al., 2007). According to Soltani (2002), the accounting profession has recognized
that the timeliness of reports is a significant characteristic of financial accounting information for the users of
accounting information, and for regulatory and professional agencies.
In describing timeliness, Carslaw and Caplan, (1991) and Epstein, Adler and Foran, (1997) opined that
timeliness requires that information be made available to users as quickly as possible and before it loses its
relevance for decision making. It is recognized in the literature that the shorter the time between a company's
financial year-end to the date of the auditor's report, the more benefit can be obtained from the audited
financial statements (Davies & Whittred, 1980; Gilling, 1977; Abdulla, 1996). However, it is not acceptable to
publish financial statements unless a certified public accountant (external auditor) first audits them. Leventis,
Weetman, and Caramanis (2005) argued that the time lag in publishing the audit report is a critical factor in
emerging and newly developed capital markets where the audited financial statements in the annual report are
the only reliable source of information available to investors. In essence, the usefulness of the information
conveyed in the financial statements will diminish as the time lag increases
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Timely corporate financial reporting is an imperative qualitative trait and a essential part of financial
accounting. Financial information needs to be readily available to its users as swiftly as possible to make
corporate financial statement information pertinent decision-making process.
Timely reporting on financial statements is needed for healthy financial markets. Timely financial reporting
aid in efficient and timely allocation of resources by reducing propagation of asymmetric information, by
improving pricing of securities, and by mitigating insider leaks, rumors and trading in the market (Kamran,
2003). Timeliness in financial reporting augments the efficacy of the financial information. The timeliness of
audited financial reports is considered vital and significant determinant influencing the usefulness of financial
information made available to external users (Almosa et al., 2007 and Aljifri & Khasharmeh, 2010).
Audit report lag, which is the number of days from fiscal year end to audit report date, or inordinate audit
lag, jeopardises the quality of financial reporting by not providing timely information to investors. Delayed
disclosure of an auditor's opinion on the true and fair observation of financial information prepared by the
management exacerbates the information asymmetry and increases the uncertainty in investment decisions
(Mohamad-Nor, Shafie & Wan-Hussin 2010).
Timeliness can be argued from three perspectives. Preliminary lag which is the interval between balance
sheet closing date and the date of the notice of the annual general meeting; audit report lag which is interval
between the balance sheet closing date and the signed date of the auditor’s report; and total lag which is the
interval of days between the balance sheet closing date of the annual general meeting (Ettredge, Li & Sun
2006 and Zaitul, 2010).

5. Attributes that impact on the timeliness of financial reporting

There is substantiation in prior research that industrial factors and company have an effect on the firm’s
choice of internal governance mechanism in particular with respect to performance measures. In examining
companies attributes, Engelthere are three categories conceptually identified, these are: controllable, partially
controllable and uncontrollable. Controllable attributes are those under the control of the firm. Partially
controllable attributes are those that cannot be changed at will by the firm but susceptible to change in the
long-run and include organizational resources and organizational maturity. In addition, the uncontrollable
attributes are those that fall outside the direct control of the firms and include organizational sizes and
structures. Considering that there is always a day of reckoning, the attributes, whether controllable or
uncontrollable, is to some extent vulnerable to manipulation by the managers of the organization. This
suggests that company attributes may perhaps be an imperative determinant of the quality of financial
reporting in view of the fact that managers can manipulate such attributes to guarantee that short-term results
are well-matched with expectations.
Several variables and attributes that could impact the timeliness of financial reporting have been recognized
in preceding researches. Despite the fact that such attributes may systematically differ across group of
company and across time, those attributes selected are more perceptive to, or more exact (with less noise) as
regards the quality of financial reporting. To examine their impact on the timeliness of financial reporting in
Nigeria, this study centers on the following attributes identified in previous literatures and are considered
applicable to the Nigerian context – audit firm size, age of a company and profitability.

5.1. Audit firm size

Audit firms differ in sizes. As a result, it is expected that the larger the audit firms, the greater the incentive
to finish audit works, ‘ceteris paribus’, in effect this may be done first and foremost to maintain their
reputation otherwise they might lose the opportunity of being the auditors of the client in ensuing years. It has
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been found that the size of a company influences the quality of financial reporting. A number of reasons have
been adduced to support the relationship between quality of financial report and company size. To start with,
large companies enforce strong internal control system in their organizations, have more resources to institute,
and can afford continuous audits.
Arguing along the same line, Ahmed and Nicholls (1994) observed that it is more likely that large firms
will have the resources and expertise necessary for the production and publication of more sophisticated
financial statements and, exhibit more disclosure compliance and greater levels of disclosure and reliability.
Secondly, Lang and Lundholm (1993) pointed out that large firms tend to have more analyst followings than
small firms do and therefore may be subjected to greater demand for information. Owusu-Ansah (1998) and
Ahmed (2003) who noted that large firms are more visible to the public view and face many pressures from
media analyst to release more credible financial information share this view. Accordingly, the larger the firm,
the more reliable and credible its financial reports should be.

5.2. Age of company

It has been acknowledged that the age of a company as an impact on the disclosure of information, which
invariably mirrors reliability of financial reports. According to Owusu-Ansah (1998), the impact of company
age on the disclosure of information may be ascribed to three factors- the fact that a company may be young
and face stiff competition, the cost and the ease of gathering, processing, and disseminating relevant
information and lack of track record on which to rely for public disclosure. In consequence, it can be inferred
from the studies that the older company is, the more reliable its financial reports would probably be and the
less the likelihood of litigation arising from audit failure. Under the context of Nigeria, it is not possible to
conclude with no prevarication that older companies will necessarily disclose more dependable information
than newly established firms will.

5.3. Profitability

In terms of profitability, managers of organizations would be more eager to report profit more rapidly than
reporting loss because of the effect such news could have on the share price and other indicators. This
affirmation has been supported by prior study, which documents the fact that managers are timely to release
good news (profit) compared to bad news (loss). The assertion is also in consonance with agency theory that
suggests that managers of larger profitable companies may wish to disclose more information to obtain
personal advantages like continuance of their management position and compensation (Inchausti, 1997).
When companies earn profits, there are fewer tendencies to stage-manage information.

6. Theoretical Framework

The relationship between audit committee and timeliness of financial reporting are examined by two
theories in this study; the stakeholder theory and resource dependence theory.

6.1. Stakeholder theory

Mary Parker Follett put forward the idea of stakeholder theory around 60 years ago (Schilling, 2000) and it
re-emerged in the 1980’s. Freeman (1984) defines a stakeholder as “any group or individual who can
influence or is influenced by the achievement of the organization’s objectives”. The term “stakeholder” may,
therefore, include a large group of participants, in fact anyone who has a direct or indirect “stake” in the
 First Author name / International Journal of Research Publications (IJRP.ORG) 7

business (Carroll 1993, quoted in Schilling 2000). Direct stakeholders are shareholders, employees, investors,
customers and suppliers whose interests are aligned with the company. An example of an indirect stakeholder
is the government, which is indirectly affected by the company’s function (Kiel & Nicholson 2003).
Clarke (2004) postulated that stakeholder theory defines organizations as multilateral agreements between
the enterprise and its multiple stakeholders. The correlation between the company and its internal stakeholders
(such as employees, managers, owners) is framed by formal and informal rules developed through the history
of the link. While management may receive finance from shareholders, they depend upon employees to
achieve the productive purpose of the firm. External stakeholders (customers, suppliers, and the community)
are likewise significant, and also constrained by formal and informal rules that business must respect".
Stakeholder theory is an extension of the agency view, which expects board of directors to look after the
interests of shareholders.
On the other hand, this narrow focus on shareholders has been expanded to take into account the interests
of many different stakeholder groups, including interest groups related to social, environmental and ethical
considerations (Freeman, 1984; Donaldson & Preston, 1995; Freeman, Wicks & Parmar 2004). Sundaram &
Inkpen (2004) argue that shareholder value amplification matters because it is the only objective that leads to
decisions that enhance outcomes for all stakeholders. They argue that identifying a large number of
stakeholders and their core values is an impractical duty for managers. Proponents of the stakeholder
viewpoint also argue that shareholder value maximization will lead to expropriation of value from non-
shareholders to shareholders. In order to satisfy the various stakeholders, information should be made
available as at when required. Timeliness thus plays an essential role in this regard. In line with this, the study
espouses the stakeholder theory to ensure value maximization.

6.2. Resource dependence theory

Resource dependence theory views organizations as being dependent on their external environment and
suggests that organizational effectiveness results not only from the firm ability to manage resources but more
importantly from its capacity to make safe basic resources from the environment. Ruigrok, Peck and Tacher,
(2007) document that board member networks and contracts are fundamental for their ability to perform the
role boundary spanners securing contract for their companies. This theory is used to underpin the relationship
between the boards of directors as provider of resources and financial reporting quality.

7. Empirical Review

Adebayo and Adebiyi (2016) took a research that aimed at investigating the timeliness of financial
statements among the Deposit Money Banks in Nigeria. For the study, they selected a sample of 15 Deposit
Money Banks listed by the Nigeria Stock Exchange between 2005 and 2013. The data were analyzed and
results estimated using Ordinary Least Square (OLS) Regression, which was complimented with the panel
data estimation technique. The study tested for the relationship between bank size, leverage, profitability,
audit firm size and the timeliness of financial statements. All the variables examined were found to be
statistically significant except for leverage. The findings reveal that most of the banks now comply with
regulations, which enhance timely reporting of financial statements in Nigeria.
AL-Tahat (2015) examines the timeliness of half-yearly financial reports published by companies listed on
the Amman Stock Exchange (ASE). In addition, this study determining the association between timeliness and
attributes of companies (namely size, profitability, growth, age, leverage, audit firm size, and market listing
status). An analysis of 193 half-yearly financial reports ended on 30 June 2013 reveals that all, except seven
companies reported within an allowable reporting lag of one month. The study provides evidence that there is
 First Author name / International Journal of Research Publications (IJRP.ORG) 8

a significant association between profitability, growth, age, and market listing status and timeliness. No
significant association was evidenced between size, leverage, and audit firm size and timeliness. Plausible
explanations for these findings are provided.
Puasa, Sallehand Ahmad (2014) investigates the relationship between Audit Committee (AC)
characteristics and timeliness of financial reporting and examines the changes on the timeliness of financial
reporting after the revision of Malaysian Code on Corporate Governance in 2007 (hereinafter referred as
MCCG 2007) as compared to before the revised code. The sample of this study consists of companies listed
on Bursa Malaysia for the year of 2004 to 2006 and 2009 to 2011 equivalent to 669 firm-years observation for
each period, before and after MCCG 2007. This study is distinct from prior research conducted in Malaysia as
it views and compares the timeliness of financial reporting for pre and post period of MCCG 2007. The results
show that AC independence level and activity are significantly associated with the timeliness of financial
reporting for the period before MCCG 2007. By contrast, the results for the period after MCCG 2007 show
only composition of solely non-executive directors, size and financial expertise that are related to the
timeliness of financial reporting. The mean values of timeliness after MCCG 2007 reports significant
improvement suggesting the effectiveness and the efficiency of AC towards improving the timeliness of
financial reports.
Efobi and Okougbo (2014) explored the factors that can influence the timeliness of financial reporting in
Nigeria using a sample of 33 financial institutions (2005-2008). The Generalized Least Square (GLS)
regression method was used for the estimation and the results reveal that on the average, the sampled
companies used 122 days after the year end for the release of their financial reports. The size, leverage and
performance of the companies have a negative significant relationship with the timeliness of their financial
reports while the age of the company has a positive significant impact.
Oladipupon and Izedomi (2013) examined global demand for timely financial reporting: investigating how
prepared are Nigerian companies. Data were obtained from the annual reports and accounts of Seventy Five
(75) companies quoted on the Nigerian Stock Exchange from 2000 to 2010. The trends in delay in corporate
financial reporting were analysed using three-year moving average method and simple ordinary least square
regression. The results showed that on the average the audit delay was about 163 days while management
delay and total delay were 92 days and 255 days respectively. These appeared comparatively higher than in
most countries of the world. The trend analysis by three-year moving average and simple regression showed
that delays in corporate financial reporting had been on the decline over time but audit delay declined faster
than the management and total delays during the period under study.
Modugu, Eragbhe and Ikhatua (2012) study of determinants of audit delay in Nigeria for a sample of 20
quoted companies for a period of 2009 to 2011. The audit delay for each of the companies revealed that it
takes a minimum of 30 days and a maximum of 276 days for Nigerian companies to publish their annual
reports. Nigeria listed companies take approximately two months on the average beyond their balance sheet
date before they are finally ready for the presentation of the audited accounts to the shareholders at the annual
general meetings. The results from the panel data, which was estimated using Ordinary Least Square
regression, showed that the major determinants of audit delay in Nigeria include multinationality connections
of companies, company size and audit fees paid to auditors.
Akle (2011) carried out a study on the relationship between the timeliness of corporate financial reporting
and corporate governance for companies listed on the Egyptian stock exchange from 1998–2007. They
investigated the role of corporate governance level on the timeliness of corporate financial reporting and also
the relationship between industry type, company size, gearing, leverage, earnings quality, earnings
management, electronic disclosure, audit opinion and the timeliness of corporate financial reporting. They
found out that Egyptian publicly listed firms have been less timely in their annual financial reporting since the
application of the corporate governance principles.
 First Author name / International Journal of Research Publications (IJRP.ORG) 9

Hashim and Rahman (2010) examined the association between corporate governance mechanisms and
audit report lag among 288 companies listed at Bursa Malaysia for a period ranging from 2007-2009. Three
characteristics of board of directors such as board independence, board diligence and board expertise were
used to examine their effectiveness in assuring audit report timeliness. The result of this study revealed that
there was no significant relationship between board diligence, board independence and board expertise and
audit report lag.

8. Materials and Methods

This study is deemed to be an explorative (literature search) type of research design with a descriptive
(panel study) side to it. Panel analysis permits the researcher to study the dynamics of change with short time
series. The data for this research work are secondary in nature. The population of the study will comprise all
quoted companies in the Nigerian Stock Exchange as at January 2012, which is put at 283. This would enable
the researcher have an in-depth understanding of the timeliness of corporate financial reporting of firms
quoted on the Nigeria Stock Exchange.
A sample consisting of companies listed on the NSE was considered a good representation of quoted
companies in Nigeria since the ultimate test of a sample design is how well it represents the characteristics of
the population it asserts to represent. The annual reports or financial statements of the concerned companies
would serve the purpose for extracting the research variables and control variables. While the library section
of the Nigeria Stock Exchange (NSE); Benin Automated trading floor, will serve as the source for the
financial statements of the companies selected for the study. The data would be for a sample of 40 quoted
companies.
The data analysis method deal with the various statistical analysis involved in the description of the
collected data and consequently, making decisions and possible inferences about the phenomena represented
by the data. In this study, the descriptive statistical methods will include descriptive techniques such as the
mean, standard deviation, range, frequency distribution. More importantly, the generalized least square (GLS)
regression analysis will be used in the estimation of the models and in the determination of the causal
relationship between the variables. The reason for the GLS regression is that GLS regression has the
additional advantage that it corrects for the omitted variable bias and it allows for the examination for
variations among cross-sectional units simultaneously with variations within individual units over time.

8.1. Model Specification

The model for the study examines the effect of corporate attributes on timeliness of financial reporting
quality. The model is presented below;
TIMELIit = f(AGEit, FSIZEit , PROFit) ----------------------------------- (i)
Specifying the models in their econometric form and including the error term, we have;
TIMELIit = 1 + 2 AGEit + 3FSIZEit + 4PROFit +it -------------- (ii)
Where:
TFR = Timeliness of Financial Reporting measured as the number days between financial year end and
presentation of annual report at AGM
FSIZE = Firm size measured as log of total assets
AGE = Age of the Company
PROFIT = Profitability measured by return on equity
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Hypotheses
The research hypotheses for this study are (the hypotheses are stated in Null form);
H01: There is no significant relationship between company size and reliability of timeliness of financial
reporting in Nigeria.
H02: There is no significant relationship between the age of company and the reliability of timeliness of
financial reporting in Nigeria.
H03: There is no significant relationship between company profitability and timeliness of financial reporting
in Nigeria.

9. Presentation and Analysis of Result

Table 1. Descriptive statistics

TIMELI PROFITABILITY FSIZE AGE

Mean 111.042 0.0579 3.20E+08 16.63136

Maximum 239 31.03947 4.34E+09 27.00000

Minimum 47 -88.0133 512630.0 4.000000

Std. Dev. 0.474370 6.203799 7.64E+08 5.826910

Jarque-Bera 41.43966 298051.9 1140.499 11.43627

Probability 0.000000 0.000000 0.000000 0.003286

Where:
TIMELI= Timeliness of Financial Reporting
PROF= Profitability
FSIZE= Firm size
AGE=Firm age
The table above shows the descriptive statistics for the variables and as can be observed, From TIMELI for
the sample is approximately 111 days. The maximum is 239 days while the minimum is 47days. The Jacque-
bera statistics for data normality reveals that the series is normally distributed given the p-value of the J.B (p=
0.000). The mean for PROFIT stood at 0.058 with a maximum and minimum value of 31.039 and -88.0133
respectively. The Jacque-bera statistics for data normality reveals that the series is normally distributed given
the J.B value of 298051.9 (p= 0.000). The mean for FSIZE stood at 3.20E+08. The Jacque-bera statistics for
data normality reveals that the series is normally distributed given the J.B value of 1140.49 (p= 0.000). The
mean for AGE stood at approximately 17yrs with maximum and minimum values 27yrs and 4yrs respectively.
The Jacque-bera statistics for data normality reveals that the series is normally distributed given the J.B value
of 11.436 (p= 0.000).
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Table 2. Pearson Correlation Statistics

TIMELI PROFITABILITY FSIZE AGE

TIMELI 1 0.081953 -0.02897 0.22708

8

PROFITABILITY 1 0.057133 0.05603

4

FSIZE 1 -0.29064

AGE 1

Table 2 shows the correlation statistics for the variables. The correlation coefficient that is of particular
interest to us in this study is the correction between TIMELI and the other variables (independent variables).
As seen, TIMELI is positively correlated with PROFT (r=0.0819) and Age (r=0.227) while it is negatively
correlated with FSIZE (r=-0.0289) However, correlation analysis is limited in its inferential abilities since it
does not necessarily imply functional dependence between the variables. Regression analysis is more suitable
for inferences as it implies functional dependencies between variables. The regression result is presented
below.
Table 3. Regression Result

Aprori sign
C -1.2243
(1.6078)
{0.4476}

+ 0.1953
AGE (0.1024)
{0.0583}
+
PROFT 0.00796*
(0.0022)
{0.0007}
+
FSIZE -0.10043
(-0.2198)
{0.8269}

Ar(1) 0.03728
(0.3086)
{0.9040)
R2 0.5602
Adj R2 0.4265
F-Stat 4.1898
P(f-stat) 0.000
D.W 2.431

Table 3 above is the regression result for the estimation of the model specified earlier. The focus of the
study is on corporate attributes and financial reporting timelines. Specifically, the study focuses on three
 First Author name / International Journal of Research Publications (IJRP.ORG) 12

corporate attributes; firm size, age and profitability. Regressing the independent variables on TIMELI, the R2
for model 1 is 0.5602, which implies that the model explains about 56% of the systematic variations in the
dependent variable while the adjusted R2 is 0.427. The F-stat is 4.189 (p-value = 0.00) is significant at 5% and
suggest that the hypothesis of a significant linear relationship between the dependent and independent
variables cannot be rejected. It is also indicative of the joint statistical significance of the model. The D.W
statistics of 2.43 indicates the absence of stochastic dependence in the model.
Focusing on the performance of the coefficients, we observe that AGE has a positive (0.1953) effect though
not statistically significant at 5% level (p=0.0583). The result implies that though the age of the firm has a
positive relationship with timeliness of financial reporting, the age is not a statistically significant factor that
affects the timeliness of financial reporting. The FSIZE has a negative (-0.10043) effect on timeliness of
financial reporting. This implies that bigger firms could have lower reporting timeliness because of their size
and the complexities that could be associated with auditing such firms. However, the result is again not
statistically significant at 5% (p=0.8269) which suggests caution in the inferences made regarding the
variable. Finally, PROFT is positive (0.00796) and significant at 5% (p=0.007). This implies that companies
doing well will have higher timeliness in financial reporting.
In terms of profitability, managers of organizations would be more willing to report profit faster than
reporting loss because of the effect such news could have on the share price and other indicators. This
assertion has been supported by prior research, which documents the fact that managers are prompt to release
good news (profit) compared to bad news (loss) (Chambers & Penman 1984). The assertion is also in
consonance with agency theory that suggests that managers of larger profitable companies may wish to
disclose more information to obtain personal advantages like continuance of their management position and
compensation (Inchausti, 1997).

9.1. Hypotheses Testing

The following hypotheses stated in null form and tested will serve as the basis of this research based on the
research objectives;
H01: There is no significant relationship between firm age and financial reporting timelines
Decision Rule
We accept the null hypothesis if the probability value for the coefficient beta is > 0.05 at 5% significance
level, otherwise we reject the null and accept the alternative.
Focusing on the performance of the coefficients, we observe that AGE has a positive (0.1953) effect though
not statistically significant at 5% level (p=0.0583). The result implies that though the age of the firm has a
positive relationship with timeliness of financial reporting, the age is not a statistically significant factor that
affects the timeliness of financial reporting. Hence we accept the null hypothesis of no significant relationship
between firm age and financial reporting timelines.
H02: There is no significant relationship between profitability and financial reporting timeliness
Decision Rule
We accept the null hypothesis if the probability value for the coefficient beta is > 0.05 at 5% significance
level, otherwise we reject the null and accept the alternative.
Financial performance is positive (0.00796) and significant at 5% (p=0.007). This implies that companies
doing well will have higher timeliness in financial reporting. Hence, we reject the null hypothesis of no
significant relationship between Leverage and corporate transparency. Hence we reject the null hypothesis of
no significant relationship between profitability and financial reporting timelines.
 First Author name / International Journal of Research Publications (IJRP.ORG) 13

H03: There is no significant relationship between firm size and financial reporting timeliness.
Decision Rule
We accept the null hypothesis if the probability value for the coefficient beta is > 0.05 at 5% significance
level, otherwise we reject the null and accept the alternative.
The FSIZE has a negative (-0.10043) effect on timeliness of financial reporting. This implies that bigger
firms could have lower reporting timeliness because of their size and the complexities that could be associated
with auditing such firms. However, the result is again not statistically significant at 5% (p=0.8269) which
suggests caution in the inferences made regarding the variable. Hence we accept the null hypothesis of no
significant relationship between firm size and financial reporting timelines.

10. Conclusions

The timeliness of audited corporate annual financial reports is considered to be a crucial and an essential
factor affecting the usefulness of information made available to various users. Thus accounting information is
required to be made available within a short period of time from the end of the reported period; otherwise, it
loses some of its economic value. Therefore, reducing audit delays and improving timeliness of audit reports
is recognized by the accounting profession, users of accounting information, and regulatory and professional
agencies as an important characteristic of financial accounting information. Using the Generalized least
squares regression analysis, this study found the following; (i) Firm age has no significant effect on financial
reporting timelines, (ii) Profitability has no significant effect on financial reporting timelines and (iii) Firm
size has no significant effect on financial reporting timelines.
In achieving improvement in the timeliness and in achieving the objective of making the financial
statements readily available for making timely decisions, the Nigerian stock exchange, securities and
exchange commission, the Financial Reporting council, the Central Bank of Nigeria and other regulatory
bodies should put in place measures to ensure strict compliance with the laid down rules and regulations and
also, the it was discovered that the time lag prescribed by the regulatory bodies are usually too much thus
encouraging companies to engage in the act of delaying their financial statements.
Also, companies should put in place measures of reducing the time lag between the financial year end and
the Annual General Meeting (AGM) in order to boost the confidence the financial statement users have in
using financial statements for decision making.
Companies should however consider the cost and the benefit of timely disclosure. Furthermore, measures
should be put in place to ensure that the audits of companies are carried out in due course.

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Biographical note: Ehijiele Ekienabor is a Director at Ekiens Nig. Ltd. He has a wide array of experience as an entrepreneur in small
scale businesses in Nigeria. He is a lecturer at Igbinedion University Okada, Nigeria. He holds a B.Sc. degree in Business Administration,
M.Sc. degree in Management and currently a PhD student, Igbinedion University Okada, Nigeria. His research and teaching interests are
in the areas of human resources management, entrepreneurship development/small scale industries, marketing management,
organizational behaviour, banking management, foreign direct investment, poverty, and poverty alleviation in sub-Saharan Africa, and
management ethics across the globe and Nigeria’s political and social development.