The focus on audit report lag is im

The focus on audit report lag is important for two reasons. First, the timeliness of financial statements is an important issue for investors because “. . . periodic reports contain valuable information for investors. . . and. . . a lengthy delay before that information becomes available makes the information less valuable to investors” (Securities and Exchange Commission(2002)). Bartov and Konichitchki (2017) confirm that late filings at the SEC are accompanied by negative abnormal stock price reactions. Given that financial statements cannot be filed before the audit report date, research on audit report lag is clearly pertinent (Whitworth & Lambert, 2014). Second, audit report lag directly indicates whether clients benefit from an audit firm merger because only after the audit of financial statements is completed may clients benefit from their use.Reduced audit hours may result from a merger (Gong et al., 2016). However, they are not in themselves evidence that clients benefit from a merger. In addition, audit report lag is more objectively observed and measured than audit hours, which are not publicly observable and may be under-reported if the performance of the audit staff is evaluated based on the budgeted hours (Bell, Landsman, & Shackelford, 2001).