Impact of Audit Report Lag, Institutional Ownership and Board Characteristics on Financial Performance

The present study's main objective is to assess the impact of audit report lag, institutional ownership, and board characteristics on the financial performance of listed firms on the Tehran Stock Exchange. 126 firms were assessed for this study during 2013-2017. To assess the firm performance, two criteria of ROE and ROA were used, and Audit Report Lag is measured via the number of days between the end of the firm's fiscal year and the audit report's date. Results show that audit report lag has a negative and significant relationship with ROA and ROE. A decrease in the number of days spent by independent auditors for signing annual reports would probably enhance firm performance. Moreover, board independence and board size have a negative impact on firm performance. In contrast, institutional ownership has a positive effect on firm performance, and the gender diversity of board members does not affect firm performance. Reporting lag is more related to patterns and dominant norms in the industry than analyzed firms' features. Besides, Governance characteristics like Institutional Ownership and Board Characteristics are of great importance for creating economic sustainability in developing countries. In the emergent markets and developing countries, like Iran with a specific ownership structure, governmental policies, culture, and more importantly, corporate governance system and which is faced with economic sanctions and its dominant norms can be different from that of the other countries, the impact of audit report lag and governance characteristics may be different on financial performance. Also, due to the global nature of the economy and the possibility of investing in each global capital market, performing this research and its results are necessary for facilitating decision-making during investing in Iranian firm stocks, which are a reason for conducting this paper.