Financial Leverage and Timeliness of Audit Reporting of Listed Industrial Goods Firms in Nigeria

Abstract

Exceptionally leveraged firms need extensive auditing time and standard auditing services which are carried out by hiring qualified auditing firms, with such auditors putting in more time to investigate authenticity of the debts with managers of such companies obligated to relate more information in their audited annual reports and accounts which may lead to probable delay in timeliness of audit reporting. The study therefore, examined effect of financial leverage on timeliness of audit reporting of listed industrial goods firms in Nigeria. The population of the study comprised all the 14 listed industrial goods firms on the floor of the Nigerian Stock Exchange (NSE). A purposive sampling technique was used to arrive at a sample size of thirteen (13).The research used secondary sources of data collection covering a period of seven (7) years from 2012 to 2018.The dependent variable is timeliness (TML) while the independent variable is Financial Leverage (LEV) and Size of the company (SZCOM) is the control variable. Multiple regression analysis with Random Effects Model was employed to analyse data. The panel data result which was estimated through the use of Ordinary Least Square (OLS) method showed that LEV is statistically significant; hence, has significant effect on audit report timeliness. The study concludes among others that a decrease in financial leverage result to an increase in timeliness of audit report. It is therefore recommended that, as the amount of leverage used by listed industrial firms in Nigeria should be reduced, the lesser the leverage, the more timely the audit reports.