The Impact of Sustainability Reporting Level on Audit Report Lag: An Empirical Study in Saudi Arabia

Abstract

As sustainability reporting becomes increasingly important, companies worldwide are putting more effort into reporting the impacts of their operations on governance, economics, society, and the environment. Simultaneously, auditors face mounting pressure to reduce audit report lag, which reflects the quality and reliability of financial reporting. Consequently, the objective of this study is to examine the impact of sustainability reporting level on the audit report lag of Saudi non-financial firms. As a result, we amassed a comprehensive dataset consisting of 654 firm-year observations for 140 such firms in Saudi Arabia. Then, two distinct measurements for the dependent and independent variables that were extracted from prior research were applied to this data for analysis.  Therefore, in order to examine our hypothesis, we conducted a linear regression analysis. The findings indicated that the sustainability reporting level and the audit report lag for non-financial Saudi firms are significantly and negatively correlated. This conclusion represents a pioneering effort within the Saudi Arabian context to facilitate the attainment of the nation’s 2030 Vision objectives, enhance capital market efficiency, and boost foreign investor confidence. As such, it can provide valuable insights for Capital Market Authority, policy makers, and decision-makers.