Abolition of mandated joint-audit requirements: Impact on audit reporting lag in an emerging capital market

Abstract

The study aims to examine how changes in the Kuwait audit market following abolition of mandated joint-audit requirements impact audit reporting lag. Analysis tests whether joint-/solo-audit switches (following abolition mandated requirements) affected the level and change in audit reporting lag. The study also tests if the joint-audit pair combination is a decisive factor in determining the (a) level and change in audit reporting lag and (b) audit quality following a switch to a solo-audit. Data is collected from 132 Kuwait-incorporated, nonfinancial firms listed continuously on the Boursa Kuwait from 2015 to 2019 that provides 660 firm-year observations (528 firm-years main empirical tests). Analysis indicates that the following abolition of mandated joint-audit requirements, Kuwait listed firms swiftly switched to solo-audits, generally leading to a significant increase in audit reporting lag. Tests indicate that audit reporting lag was significantly less for joint-audits relative to solo-audits. Additional results show a significant negative association between the quality of joint-audit pair combinations and audit reporting lag. However, there is no significant association between audit reporting lag and the quality of solo-audit type. Test results indicate mixed support for the perception that a joint-audit pair combination significantly influences the level and change in audit reporting lag following the switch to a specific solo-audit type.