Moderating role of CEO expertise on the relationship between capital structure and financial reporting timeliness of Saudi-listed companies
Hamid Ghazi H Sulimany, Ehsan Almoataz, Adnan Ali, Faisal Faisal, Abdulrahman Atllah Alharbi
TL;DR
This study explores how CEO financial expertise affects the relationship between a company's debt financing and timely financial reporting in Saudi firms.
Contribution
The study introduces CEO financial expertise as a moderator in the capital structure and financial reporting timeliness relationship in the Saudi context.
Findings
Capital structure through debt financing significantly influences timely financial reporting.
CEO financial expertise enhances the effect of debt financing on reducing audit report delays.
Findings remain robust after controlling for alternative measures and external factors like the COVID-19 effect.
Abstract
In this study, we investigated the effect of capital structure on financial reporting timeliness with an interaction role of CEO financial expertise. Using the fixed effects technique, we analysed data from listed firms on the Saudi Stock Market between 2014 and 2023. Our results showed that capital structure choice through debt financing may significantly influence firms to reveal their audited accounts on a timely basis to signal their financial capabilities. Additionally, the results provide strong evidence that a CEO’s financial expertise may enhance the role of debt financing in reducing audit report delays, consistent with upper echelons and agency theories. The findings appear to be robust with the use of alternative measures, the COVID-19 effect and endogeneity control.
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Taxonomy
TopicsAuditing, Earnings Management, Governance · Corporate Social Responsibility Disclosure · Corporate Finance and Governance