Audit Report Lag and Auditor-Client Geographic Proximity: Evidences from Information Advantage of Interaction & Improve Audit Efficiency

This paper assessed the relationship between auditor-client geographic proximity and audit report lag. Research data include 917 firm-year observations which consist of 131 sample firms listed in Tehran Securities & Exchange over the period 2013 to 2019. Research hypotheses analyzed using multivariate regression models based on panel data with fixed effect and generalized least squares method. The results documented that auditor-client geographic proximity caused to decrease the audit report lag. Because such auditors are able to interact more frequently with the client and obtain client-specific news, which increases their ability to effectively monitor the client; so it lead to decrease the auditor report lag. According to the findings, some client characteristics, auditor characteristics, board & audit committee characteristics had impact on audit report lag. Modified audit opinion, board financial expertise, bad news,financial distress position, reporting risk & complexity, external financing and product market competition had direct impact on auditor report lag; auditor rotation, auditor quality rank, audit committee independence and firm size had inverse impact on auditor report lag. But audit fee, board independence, institutional ownership, ownership concentration, audit committee financial expertise, financial leverage, capital expenditure and loss had no impact on auditor report lag.