EARNINGS BENCHMARKS AND TIMELINESS OF AUDIT REPORTS: CORPORATE GOVERNANCE MECHANISM AS MODERATING VARIABLE

Abstrak

This study examines the relationship the tendency of management to meet earnings targets (earnings benchmarks) and the timeliness of audit reports. The timeliness of audit reports is measured by the number of days from the date of fiscal year-end of the financial statements until the date of the audit report. While the tendency to meet the earnings target is measured using a tendency to report a slight of net income and little change in earnings compared with previous year. This study also examines the role of corporate governance mechanisms through the role of board of directors and audit committees in relation to earnings management’s tendency to meet earnings targets and the timeliness of audit reports. Using 419 firm-years observation of manufacturing companies listed in Indonesia Stock Exchange (IDX) during the period of 2009-2014, as well as using multiple regression, these studies did not find evidence that earnings management using a tendency to meet earnings targets affect the timeliness of audit report. However, by using 300 firm-years observation from manufacturing industry listed on IDX  for the year 2010-2014, I found weak evidence that corporate governance mechanism through the role of board of commissioners and audit committee have a moderating role that weaken the positive relationship between the tendency to meet earnings targets with the timeliness of the audit report.

Keywords: earnings benchmarks, audit report timeliness, corporate governance, board of commissioner, audit committee