EFFECT OF FIRM EFFECT OF FIRM ATTRIBUTES ON FINANCIAL REPORTING TIMELINESS OF QUOTED OIL AND GAS COMPANIES IN NIGERIA

Abstract

This study examines the effect of firm attributes on financial reporting timeliness of oil and gas companies listed on the Nigerian Stock Exchange for the period 2010 to 2019. A sample of 8 out of 10 firms was selected using purposive sampling. The study uses Ex-post facto research design. The proxies for firm attributes include; firm size, profitability, leverage and firm age while financial reporting timeliness was measured using audit report lag (ARL). Panel data were collected from the annual reports and accounts of the sampled firms. The fixed effect regression model was used to analyse the data. The result of the study indicates that firm size, profitability and firm age significantly affect financial reporting timeliness measured by ARL while leverage does not influence financial reporting timeliness proxy. Therefore, the study concludes that large firms that have come of age used their profitability to enhance financial reporting timeliness. The study recommends that moderate and relatively small firms as well as newly listed firms should thrive to deploy a portion of their profit to provide timely financial reports to the public.
Keywords: Financial reporting timeliness, audit report lag, firm attributes, oil and gas companies, Nigeria

Introduction
Published information may lose its importance if there is unjustified delay in it being reported. However, world over, delay in the auditing of financial statements have been identified as leading to an overall delay in their publication. The annual financial report of an organization is one of the significant factors that affect decision making processes of the users of accounting information especially, shareholders and potential investors. A timely issue of financial statement enhances the decision-making abilities of existing and potential investors. A financial statement is said to be timely when it is prepared and presented as at when due to the users and is otherwise, when it is delayed for whatever reason beyond the reasonable period. The usefulness of publishing corporate financial statements for monitoring corporate activities, facilitating investment decisions and ensuring transparency of operation has been accepted by many regulatory bodies. It has also, been asserted that decisions based on information from financial statements may be affected by the timeliness of its release. This means that the published information may lose its relevance if there is undue delay in it being reported (Mahajan & Chander, 2008).
Timely reporting contributes to the prompt and efficient performance of stock markets in their pricing and evaluation functions (Owusu-Ansah & Stephen, 2000) and undue delay in releasing financial statements increases the uncertainty associated with investment decisions (Ashton, Willingham & Elliott, 1987). Therefore, the need to ensure timely financial reporting among publicly traded companies cannot be overemphasized. This is not only because financial statements communicate crucial information about the financial health of a company but timely information release guarantee relevance of financial information for decision making purposes. Financial statements must be availed to users timely in order to make use of the information for informed economic decisions. Irrespective of the quality of financial information, its value diminishes if not made available in time for informed decisions. Therefore, the worth of published accounting information depends largely on their timeliness and accuracy (Bala & Idris, 2015).
Around the world however, delay in the auditing of financial statements have been identified as leading to an overall delay in their publication. While auditing is indispensable for ensuring the accuracy and transparency of published financial statements, there is a need to address the delays caused by auditing. This problem is predominantly evident in less developed economies where monitoring for timeliness of financial reporting is not appropriately mandated and where the overall business environment is not attuned to observing promptness and efficacy on issues like financial reporting. Furthermore, there are deficits in the sustenance structure of the profession with regards to skilled professionals or the number of auditing firms, which again add to the problem of audit delay (Ohaka & Akani, 2017).
Delay in auditing and subsequent submission of audited accounting reports remain a concern for investors and regulators. Finding the factors responsible for these delays remains an academic research problem. Previous empirical studies have focus on timeliness of financial reporting of listed firms generally (Owusu-Ansah, 2000; Iyoha, 2012; Appah & Emeh, 2013; Efobi & Akougbo, 2014; Adebayo & Adebiyi, 2016; Ohaka & Akani, 2017). This study identifies that timeliness of annual reports of listed oil companies has not been given research attention. Again, no study as extant literature reveals and to the best of researcher’s knowledge has studied the effects of firm size, profitability, leverage and age on financial reporting timeliness in the oil and gas sector. This constitutes the first gap in literature to be filled. The findings from this study will be of immense significance to the oil and gas sector in Nigeria and as well makes invaluable contribution to extant literature arising

from the peculiarity of the audit market and the nature of the Nigerian corporate environment.
Secondly, CAMA (2020) as amended stipulates that the maximum time within which companies are expected to complete and make public their financial report is three (3) months. However, most companies present their reports much later than this date (Modugu, Eragbe & Ikhatua, 2012), as a result of the delay, stakeholders may have to take investment decisions without proper verification or resort to information from unofficial channels that may provide wrong information or wrong interpretation and that could mislead decision makers and decision making processes. Why does this trend persist? Financial analysts may thus interpret undue delay in reporting as an attempt to conceal information and this may adversely affect the value of the firm. On the other hand, there is an incentive for such firms to provide timely reports in order to avoid speculative trading on their shares in the stock market (Ohaka & Akani, 2017). Therefore, a study on the current level of timeliness of audit report in Nigeria and relating it to firm attributes is in the right direction and this gap motivates the study.