Eurasian Business Review

, Volume 7, Issue 3, pp 437–449 | Cite as

The relationship between audit report delay and investment opportunities

  • Zeinab Azami
  • Tabandeh Salehi
Original Paper


Higher investment opportunities can increase audit risk. Therefore, external auditors need to extend the scope of their substantive tests and their audit work, and in turn, this leads to longer audit report delay. This study aims at investigating the relationship between audit report delay and the extent of investment opportunities among firms listed on Tehran stock exchange (TSE). We tested our hypotheses on a sample of 133 firms listed on TSE during the period 2006–2014, using multivariate regression analysis on panel data. Our results revealed that the audit report delay is longer for firms with higher investment opportunities. The research results also show that small companies, lost companies and companies that have major weakness in internal controls, are likely to have a longer delay in the audit report. The delay in the audit report of companies that had an independent auditor change is greater during the current period. The paper provides useful information for firms’ management and external auditors.


Investment opportunities Audit report delay Audit risk Independent auditors 

JEL Classification

M41 M42 


  1. Ahmed, A. A. A., & Hossain, Md S. (2010). Audit report lag: A study of the Bangladeshi listed companies. ASA University Review, 4(2), 49–56.Google Scholar
  2. Ashton, R. H., Willingham, J. J., & Elliott, R. K. (1987). An empirical analysis of audit delay. Journal of Accounting Research, 25(2), 275–292.CrossRefGoogle Scholar
  3. Bamber, E. M., Bamber, L. S., & Schoderbek, M. P. (1993). Audit structure and other determinants of audit report lag: An empirical analysis. Auditing: A Journal of Practice and Theory, 12(1), 1–23.Google Scholar
  4. Belghitar, Y., & Khan, J. (2013). Governance mechanisms, investment opportunity set and SMEs cash holdings. Small Business Economics, 40(1), 59–72.CrossRefGoogle Scholar
  5. Cahan, S. F., Godfrey, J. M., Hamilton, J., & Jeter, D. C. (2008). Auditor specialization, auditor dominance, and audit fees: The role of investment opportunities. The Accounting Review, 83(6), 1393–1423.CrossRefGoogle Scholar
  6. Chan, K. H., Luo, V. W., & Mo, P. L. (2016). Determinants and implications of long audit reporting lags: Evidence from China. Accounting and Business Research, 2(46), 145–166.CrossRefGoogle Scholar
  7. Chen, K. Y., Elder, R. J., & Hung, S. (2010). The investment opportunity set and earnings management: Evidence from the role of controlling shareholders. Corporate Governance: An International Review, 18(3), 193–211.CrossRefGoogle Scholar
  8. Ettredge, M. L., Li, C., & Sun, L. (2006). The impact of SOX Section 404 internal control quality assessment on audit delay in the SOX era. Auditing: A Journal of Practice and Theory, 25(2), 1–23.CrossRefGoogle Scholar
  9. Habib, A., & Bhuiyan, M. B. U. (2011). Audit firm industry specialization and the audit report lag. Journal of International Accounting, Auditing and Taxation, 20(1), 32–44.CrossRefGoogle Scholar
  10. Lai, K. W. (2009). Does audit quality matter more for firms with high investment opportunities. Journal of Accounting and Public Policy, 28(1), 33–50.CrossRefGoogle Scholar
  11. Lee, H. Y., Mande, V., & Son, M. (2009). Do lengthy auditor tenure and the provision of non-audit services by the external auditor reduce audit report lags? International Journal of Auditing, 13(2), 87–104.CrossRefGoogle Scholar
  12. Leventis, S., & Caramanis, C. (2005). Determinants of audit time as a proxy of audit quality. Managerial Auditing Journal, 20(5), 460–478.CrossRefGoogle Scholar
  13. Mohamad-Nor, M. N., Shafie, R., & Wan-Hussin, W. N. (2010). Corporate governance and audit report lag in Malaysia. Asian academy of management Journal of accounting and finance., 6(2), 57–84.Google Scholar
  14. Owusu-Ansah, S. (2000). Timeliness of corporate financial reporting in emerging capital markets: Empirical evidence from the Zimbabwe stock exchange. Accounting and Business Research, 30(3), 241–254.CrossRefGoogle Scholar
  15. Pham, T., Dao, M., & Brown, V. L. (2014). Investment opportunities and audit report lags: Initial evidence. Accounting and Finance Research, 3(4), 45–57.CrossRefGoogle Scholar
  16. Reheul, A. M., Caneghem, T. V., & Verbruggen, S. (2013). Audit report lags in the belgian nonprofit sector: An empirical analysis. Accounting and Business Research, 43(2), 138–158.CrossRefGoogle Scholar
  17. Schwartz, K. B., & Soo, B. S. (1996). The association between auditor changes and reporting lags. ContemporaryAccounting Research, 13(1), 353–370.Google Scholar
  18. Sultana, N., Singh, H., Mitchell, J. L. W., & Van der Zahn, M. (2015). Audit committee characteristics and audit report lag. International Journal of Auditing, 19(2), 72–87.CrossRefGoogle Scholar
  19. Tanyi, P., Raghunandan, K., & Barua, A. (2010). Audit report lags after voluntary and involuntary auditor changes. Accounting Horizons, 24(4), 671–688.CrossRefGoogle Scholar
  20. Tsui, J. S. L., Jaggi, B., & Gul, F. A. (2001). CEO domination, growth opportunities, and their impact on audit fees. Journal of Accounting, Auditing & Finance, 16(3), 189–208.CrossRefGoogle Scholar

Copyright information

© Eurasia Business and Economics Society 2016

Authors and Affiliations

  1. 1.Academic Member of Accounting, Baft Higher Education CenterShahid Bahonar University of KermanKermanIran

Personalised recommendations