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Relationships between Timeliness in


Corporate Reporting and Corporate Attributes
John K. Courtis
Published online: 27 Feb 2012.

To cite this article: John K. Courtis (1976) Relationships between Timeliness in Corporate Reporting and
Corporate Attributes, Accounting and Business Research, 7:25, 45-56, DOI: 10.1080/00014788.1976.9729085

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W I N T E R 1976 45

Relationships between Timeliness in


Corporate Reporting and Corporate Attributes
John K. Courtis

'Timeliness', one of the qualitative objectives of


financial statements, requires that the publication of TABLE I
accounting information be as rapid as possible to
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Accounting Period Balance Dates


assure the availability of current information in the
Freauencv Percentaae Freauencv
hands of investors and other interested parties. A Year of'corn-. of corn- of'corn-.
decade ago Professor E. Stamp wrote in the leading End panies panies panies per
Wellington morning paper that it took Australian Quarter
and New Zealand public companies approximately 19 January 1 0.5
twice as long to report audited results as it took 31 January 5 2.5
American companies.' Whereas American auditors' 28 February 4 2.0
reports were available approximately 40 days aftertheir 31 March 81 39.7 91
clients' balance dates, New Zealand and Australian 30 April 5 2.5
31 May 7 3.4
auditors took approximately 80 days. Although Stamp 19 June 1 0.5
based his remarks on a small sample size, is there any 30 June 39 19.1 52
reason to believe (in New Zealand at least) that public 19 July 4 2.0
companies have become more punctual today in the 31 July 14 6.8
31 August 6 2.9
release of audited accounting information? 1 September 1 0.5
The purpose of this article is to report the findings 30 September 8 3.9 33
of three aspects of New Zealand corporate reporting: 1 October 4 2.0
(i) the diversity of accounting balance dates in use; 19 October 1 0.5
31 October 9 4.4
(ii) the interval of time between balance date and 30 November 2 1.o
selected other dated events; and (iii) the relationship 31 December 12 5.8 28
between the delay in releasing audited figures and
Total = 18 204 100.0% 204
corporate profitability, size and other attributes. Data
used in the study were obtained from the 1974 annual
reports of 204 listed New Zealand public companies.
The sample was not selected randomly, but consists Although the majority of companies balance their
instead of all annual reports that were available to books on March 31, subsidiaries or associates of
the writer, and represents approximately 80% of all Australian firms tend to adopt the June 30 balance
listed New Zealand public companies. date to keep in line with their Australian connections.
The popularity of this date probably also stems from
Diversity of balance dates association with the dairying industry, whose
Whereas one might have expected companies season ends then. Firms with British connections
generally to coincide their balance dates with the tend to balance at the end of the calendar year. The
end of the fiscal year (March 31), in fact only about 19th of the month is also a favourite balancing date
40% of the sample companies concluded their with some firms, particularly in the retail and ware-
accounting period on that date. Table I summarises housing fields, presumably in deference to the
the fact that no less than 18 different balance dates monthly creditors 20th due date convention. Seasonal
are employed by this corporate group. reasons also dictate an unusual date for some com-
panies, such as the meat export trade. In this case the
'E. Stamp, 'Accounts are produced Quicker in US', ideal date is between the end of one killing season
The Dominion (Wellington, New Zealand), April 5, 1966. and the start of the next. This would account for
46 ACCOUNTING AND BUSINESS RESEARCH
many companies opting for a September 30 or October
I balance date. All in all every calendar month in the TABLE II
year is represented on at least one day. As one com- Corporate Reporting Lags3
merce editor facetiously noted: ‘In commerce, as in
Mean Mean Interval Com-
romance, there is nothing too constant about a date.’* Specific Interval Interval Range panies
The implications of this diversity for the investor Lags in Days in Weeks in Days Sampled4
are not clear, although it may be speculated that inter- A 128 18 53 - 3 1 6 200
company comparisons of operating results are hind- B 83 12 8 -218 204
ered through not being able to identify the relative c 44 6 7 -166 198
D 15 2 (26)’- 91 182
progress of firms over the same interval of time. E 28 4 12 - 1 1 9 182
Insofar as this acts as a restriction to the comparability
of investment alternatives, the investor is constrained ‘There were 15 instances where notice of the annual
in the exercise of full rationality with respect to his general meeting preceded the date of the auditors’
report.
allocation of investable resources. Whether in fact
this diversity plays any rble in distorting resource
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allocation is an intriguing research idea, but one


which lies outside the scope of this study. T o illustrate: A. B. Consolidated Holdings Ltd.,
one of the sampled companies, adopts a March 31
Lag profiles balance date. The annual general meeting was held
In order to expand upon Stamp’s observation of lack on July 30 (1974)~an A-lag of 121 days. The auditor’s
of punctuality in New Zealand reporting, five interval report was dated June 26, thereby revealing a B-lag
periods were calculated from dates supplied within of 87 days with a consequent C-lag of 34 days. The
the sampled annual reports : notice of the annual general meeting was July 10,
A: interval of days between balance date and the while the meeting itself was held (as noted above)
date of the annual general meeting. on July 30, producing a D-lag of 20 days and an E-lag
B: interval of days between balance date and the of 14 days. These five types of lags were calculated
date of the auditor’s report. for each company (insofar as annual report disclosure
C :interval of days between the date of the auditor’s would allow) and averaged across the sample to
report and the date of the annual general meeting. provide yardstick figures.
D: interval of days between the date of the auditor’s The overall results of this investigation into lags
report and the date of notice of annual general indicate that the total interval of time between balance
meeting. date and the date of the annual general meeting
E: interval of days between the date of notice of averages 128 days or 18 weeks, although the range
the annual general meeting and the date the of 53 to 316 days better conveys the extremes in
actual general meeting was held. punctuality. This means that New Zealand listed
Lag A represents the total interval of time after public companies take approximately 44 months
balance date before the directors formally present beyond their balance dates before they finally present
finaiicial results to the owners of the entity. Lags the audited accounting information to the share-
B and C subdivide A into two components: the holders at the general meeting. Whether this complies
interval of days it takes before audited accounting with the objective of ‘timeliness’ in reporting is
information becomes available for release (through doubtful.
the press), and the time it then takes management to The mean total lag of 18 weeks (A-lag) consists
organise all necessary activities to bring on the (on average) of 12 weeks before auditors issue their
company’s annual general meeting. Lags D and E report (B-lag) and an additional six weeks for cor-
subdivide C into the time it takes management, once porate management to formally present the results
the auditor’s report appears, to advise the shareholder at the general meeting (C-lag). This six weeks in turn
of the forthcoming annual general meeting, and the
amount of time shareholders are given to attend the
meeting or respond to the proxy document. These 3Frequency distributions of the occurrence of corpora-
tions falling within specific lag periods are presented in
component lags provide the basis for analysing the Appendix A.
overall profile of corporate reporting lags, the results 4Lags were obtained from the same set of 204 annual
of which are summarised in Table 11. reports used in Table I. However some date omissions
occur, particularly with respect to the notice given by
management of the company’s annual general meeting.
*‘Knowing Where to Draw the Line, and When’, The Four annual reports omitted to mention the date of the
EIvening Post (Wellington, NZ), 27 September, 1975,p. 19. znnual general meeting.
W I N T E R 1976 47
consists (on average) of two weeks for management personnel. The extent to which this may account for
to give notice of the meeting (D-lag), and another B-lags is not known, but it is suspected from this
four weeks before the meeting is held (E-lag). Since writer’s awareness of the head-office locations of New
this profile is based on average results for each lag- Zealand public companies that few firms in the
type, the reader is cautioned not to infer that all present sample would honestly fit this explanation.
companies follow this rigid pattern. The ‘best’ Second, it was stated that in some cases the auditors’
company overall, i.e. Aurora Group Ltd. with the report is post-dated to coincide with the release of
shortest A-lag of only 53 days (being the difference the printed annual report. Although this would not
between October 31 and December 23) has a B-lag affect the total (A) lag time, its occurrence would
of 33 days, and a D-lag of 18 days. In general, it does distort the accuracy of lag B calculations. Where it
seem that the specific lag which can be attributed to exists, the B-lag would be shorter for that particular
the greatest overall proportion of the A-lag is that of company. Although this seems to be a reasonable
B, and it is this lag which is further analysed in the contention, it should be noted that in New Zealand
paper. there are more different public accounting firms
An obvious question which arises out of a engaged in auditing public companies than probably
consideration of this profile of lags is which anywhere else in the world. The sample of 204
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party should criticism be levelled at: corporate companies is audited by 58 different audit firms.
management or the auditors? It must be asked One doubts whether the practice of post-dating
whether New Zealand auditors need (on average) a audit reports would extend across the profession.
period of approximately three months in which to Third, it is claimed by auditors, lawyers, account-
satisfy themselves that corporate accounts give a true ants, sharebrokers, directors and managers that at
and fair view of affairs. the present time in New Zealand there are chronic
Without intimate knowledge of the specific day-to- inefficiencies in the printing industry and that as a
day procedures and interactions of auditors and their result of this the annual report takes longer to print
clients one can only speculate as to which group is than it should. However, even admitting that this is
primarily responsible for the lag. In the US, where true and that part of the total reporting lag is due to
clients are ‘organised’ by their auditors to have their an uncontrollable third party - namely, the printer -
accounts and specified other documentation ready one cannot help but wonder why this explanation
at the time of audit, the audit process is conducted should necessarily mitigate the allegation that
efficiently and with minimum disruption. This is auditors take excessive time to perform their audits.
necessarily the case in order to keep the amount of On the other side of the picture it could be sug-
the audit bill within reasonable bounds. In New gested that companies themselves are chiefly respon-
Zealand, on the other hand, it would be easy to argue sible for B-lags. It was intimated by a director of a
that the same impetus for sophistication does not large public corporation that big companiesare norm-
exist, and that both parties appear to be more lack- ally more complex in structure and simply take longer
adaisical than their US counterparts. to audit. Moreover, where losses (or inferior results)
When this writer suggested to a group of Wellington have occurred, certain delays must be expected while
auditors that auditors might be primarily responsible divisional managers ‘explain’ their results. A lawyer
for the lack of punctuality in releasing audited also alleged that companies with poor performance
corporate results, three reasons were offered why they often held back from releasing their audited figures
as a group should not, in general, be held to blame. for as long as possible so that these companies could
First, it was contended that some companies do continue any local or overseas (finance and trade)
not keep their accounting records up-to-date, and that negotiations in the best possible light. He also added
because of this the auditor is unable to commence the proviso, however, that some new companies
meaningful audit review for some weeks after balance with anticipated poor results released these promptly
date. In these cases the company’s inability to so as to confirm the shareholders’ expectation.
promptly prepare a set of accounts for the auditors In New Zealand the possibility (at this time) of
is the primary cause of the reporting (B-type) lag. delving more deeply into such delicate matters does
One auditor elaborated that some companies located not seem to be politic. Fortunately, however, there is
in non-city areas find it difficult to attract and retain a more intriguing question which can be researched,
competent office staff. These companies claim that namely, the type of relationship which exists between
they find it cheaper (?) and more convenient to the interval of time between balance date and date
employ the auditor to bring the records up-to-date of auditors’ report (i.e. B-lags) and such corporate
rather than be concerned with trying to overcome attributes as profitability, size and age. Specifically,
the problem of obtaining and holding suitable office is the more profitable company associated with a
48 A C C O U N T I N G A N D B U S I N E S S RESEARCH
short B-lag (therefore, by inference, taking less Values for these three ratios were calculated for each
time to audit), and conversely, is the less profitable of the companies in the first and fourth quartiles. T o
(and loss producing) company associated with a long illustrate, for the net income/total assets measure,
B-lag (i.e. taking more time to audit)? These and the 102 values were arrayed from least profitable to
related issues are taken up below. most profitable. Each of these values was identified
by the quartile location of its related company, and
Profitability and 6-lag quartile one companies were assignedtheir appropriate
relationship rank numbers in the array. These were then aggre-
B-lags computed for each of the 204 companies gated to determine a value of RA which was in turn
ranged from eight days to 218 days. The graph of applied to the Mann-Whimey statistic to compute
these lags illustrated in diagram I indicates a bimodal the Z score. The following formulae were employed :
distribution with a median of 81 days. The first
(NA +
quartile represents 51 companies with a range of
eight to 61 days. These companies are for convenience
U = NAN, + NA
2
I>
- RA (i>
called prompt or fast reporters of audited accounting
NA NB
information. The fourth quartile represents a ,uu = (ii)
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2
further 51 companies with a range of 99 to 218 days.
Similarly for convenience these companies are
referred to as slow reporters. Whereas the first (iii)
quartile group represents companies that took no
more than two months from balance date to report u- pu
z =
their audited results, the fourth quartile group took OU

upwards of three months, the worst company taking where NA and N, represent the sample size of
approximately eight months. Fifty percent of the quartiles I and 4 respectively. For net income to
companies sampled, namely quartiles two and three, total assets the Z value of -3.122 is significant with
indicated B-lags between 61 and 99 days. In other an alpha of .05 and a critical value of - 1.96, thereby
words half of New Zealand’s listed public companies indicating that the return on total assets of the fast
report their audited results during the third month reporters is statistically significantly greater than that
following balance date. One-quarter report more of the slow reporters.
promptly than this and one-quarter are more tardy. Similarly, significant results were obtained for
The question is whether the fast reporters display the other two components of the du Pont profitability
corporate characteristics (of which profitability is but triangle. The net income to sales ratio produced a Z
one) which are different to those of the slow reporters. score of -3.81 and the sales to total assets ratio
In order to avoid the assumptions associated with (asset turnover) produced 2.21. Because the New
parametric testing the non-parametric Mann-Whitney Zealand Companies Act 1955 does not require that
U test was used to determine whether the fast and the sales revenue figure be disclosed in corporate
slow reporters differed with statistical significance on annual reports, only 49 percent of the sample were
a number of issues. found to have included this figure. It was fortuitous
The hypothesis tested is that: that 23 companies in quartile one and another 23
‘The profitability of quartile one companies (taken companies in quartile four revealed their sales
as a group) is statistically significantly larger than revenue figures, thereby enabling calculation of these
the profitability of quartile four companies (taken two profitability measures. The conclusions that can
as a group).’ be derived from these two results is that the profit
Since no single profitability measure meets with margin obtained by fast reporters is statistically
unanimous acceptance five profitability ratios were significantly greater than that obtained by slow
examined in turn. The ‘du Pont’ system of financial reporters. The asset turnover result is lower for fast
ratio analysis was selected to identify three of the reporters than for slow reporters, thereby hinting
more important ratios, namely : that slow reporters are overtrading or undercapitalised.
Net Income It would be tempting to infer from these results
(Profit Margin) X
Sales
Sales 5For a full description of the Mann-Whitney U test see
(Asset Turnover) = Sidney Siegel, Nonparamenic Statistics for the Behavioral
Total Assets Sciences (McGraw-Hill, New York, 1956), pp. I 16-126.
NI 6A graph of the distribution of return on total assets
(Return on Investment) across B-lags for the sampled corporations appears in
TA appendix B.
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W I N T E R 1976
49
50 A C C O U N T I N G A N D B U S I N E S S RESEARCH
alone that fast reporters are significantly more profit- under all three definitions, thereby indicating that
able than slow reporters. Such, however, may not be book value of total assets, dollar sales, and the
an accurate interpretation, for when the Mann- number of employees for companies falling within
Whimey U test was applied to two other profitability the first B-lag quartile are not statistically signifi-
ratio measures, non-significant Z scores were cantly different to those for companies falling within
obtained. Net income to total capitalisation and net the fourth quartile. In other words, fast reporters and
income to net worth produced Z scores of -1.4 slow reporters do not appear to differ with respect
and - 1.67respectively. These results imply that the to those particular size attributes defined above. The
return on owners’ equity and the return on owners’ three Z values obtained from application of the Mann-
equity plus long-term debt are not significantly Whitney test were: - 1.59, .19and 1.85respectively.
different between fast and slow reporters. Since corporate size was not found to be an explana-
Absolute profit was also tested via the Mann- tory variable of relative B-lag size it must be assumed
Whitney test and with a Z score of - 2.39 was found that audit firms satisfactorily accommodatethemselves
to be significant. This indicates that the mean of the to the size of their clients. It would be naive to argue
absolute profit figures for the fast reporters is statisti- that large audit firms audit large companies and that
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cally significantly greater than the mean of the small audit firms audit small companies. In New
absolute profit figures for the slow reporters. On Zealand, with so many different audit firms, the more
closer inspection of the profit figures two further realistic interpretation seems to be that several of
observations can be made.’ While eight companies these public accounting practices have only one
in quartile four showed actual losses there were no large listed public company client, and that, further,
companies in quartile one with loss results; and some audit firms have grown in step with their clients
second, the five most profitable companies are all over the years.
from quartile one. The age attribute also indicated lack of statistical
The overall conclusion suggested by this con- significance. The Z value of -1.62 indicates that
founding evidence is that there is a tentative inverse the average ages of fast reporters and slow reporters
relationship between profitability and B-lags, although are not dissimilar.
to some extent it depends upon which profitability Number of shareholders was also found to be
measure is being considered. Further research on this statistically insignificant, as one might have expected.
specific area needs to be conducted before the hypo- This means that the size of the share register is most
thesis can be accepted or rejected without qualifica- probably not a determining factor in the length of the
tion. B-lag.
The final attribute considered was length of annual
Corporate attributes and 6-lag report. It seemed plausible to investigate whether
relationships fast reporters produce shorter annual reports than
slow reporters. No statistical significance was found.
Four attributes were related to quartile one and quar-
Out of all 12 tests the Z value of - .43 is the second
four B-lags in an effort to determine whether fast
closest to zero. Fast and slow reporters
reporters and slow reporters demonstrated further
are almost identical with respect to pagination length
differentiating characteristics. The identification of
of annual report. Moreover, they are identical in
‘corporate personalities’ for each of these two groups
mean length (of 20 pages) to companies falling within
lies outside the scope of this research, and in any
both quartiles two and three. In other words the
event, this investigation has employed information
length of the annual report seems to have no bearing
disclosed within annual reports as the source of
on the time it takes to release audited accounting
data.
information.
The four attributes investigated were: (i) corporate
A summary of the results discussed abovefrom each
size, as defined by book value of total assets, the dollar
of the Mann-mmey test is provided in
value of sales revenue, and number of employees;
Table 111. In each case an alpha of .05 was adopted
(ii) age, as defined by the number of annual general
with a corresponding critical value for significance of
meetings held by the entity as a public company;
& 1.96.
(iii) number of shareholders; and (iv) the pagination
The sort of profile which is suggested from all of
length of the annual report.
the above results is simply that those companies
The size attribute showed itself to be non-significant
which tend to be tardy in the release of their audited
accounting information are those which are more
’A graph of the distribution of absolute profit across
likely to have experienced inferior operating results.
B-lags appears in appendix C. More bluntly, the message which seems to emerge
W I N T E R 1976 51

TABLE 111
Summary of Mann-Whitney U test results
Measure NA Ne RA U ClU ou Z
Net income to total assets 51 51 3093 a34 1300.5 149.42 -3.1 2 *
Net income to sales 23 23 71 4 91 264.5 45.52 -3.81 *
Sales to total assets 23 23 440 365 264.5 45.52 2.21 *
Absolute $ profit 51 51 2984 1122 1300.5 149.42 -2.39 *
Net income to total capitalis;ation 51 51 2841 1086 1300.5 149.42 -1.44
Net income t o net worth 51 51 2877 1050 1300.5 149.42 -1.67
Book value of total assets 51 51 2865 1062 1300.5 149.42 -1.59
Sales revenue 23 23 549 256 264.5 45.52 .I 9
Number of employees 9 7 49 14 31.5 9.75 1.85
Age of company 43 41 2009 700 881.5 111.75 -1.62
Number of shareholders 13 17 176 136 1 1 0.5 23.89 1.07
Annual report length 50 51 2588 1212 1275 147.22 -0.43
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TABLE IV
After-Tax Profits per B-Lag Quartile

1 2 3 4
Total Net Income $69,779,409 $57,232,242 $43,575,642 $27,532,293
Av. Net Income per Company $1,368,224 $1,079,854 $854.424 $539,849
Standard Deviation $2,763,005 $2,252,322 $1,802,365 $845,325
Coefficient of Variation 2.02 2.09 2.1 1 1.57
Number of Companies with Losses 0 2 2 8
Range of Net Incomes $1 7,871,020 $9.146,000 $1 0,256,000 $4356,000
$36,083 ($2,343,000) ($2,323,000) ($294,944)

is that if a New Zealand public company should demonstrate how B-lags are distributed across New
withhold the release of its audited accounting Zealand industries. This is presented in Table V
figures for more than three months beyond balance along with the mean B-lag per industry, the standard
date, the likelihood is that that company experienced deviation of these B-lags and the associated co-
either an operating loss or a lower profit than those efficient of variation.
companies which released audited results within the Of the 16 classifications only three industries appear
first three months. Table IV identifies a profile of to show average B-lag results which fall outside the
after-tax profits per quartile of companies. second and third quartile ranges. ‘Fuel and Energy’
The trend seems quite clear. The total net profits with a mean B-lag of 38.5 days appears to represent
of the fast reporters are approximately $70m, falling the most prompt reporting group. ‘Service Industries’
slightly to $57m for quartile two companies, dropping with a mean of 100.7 days is one group of slow
further to $43m in quamle three, and falling away reporters, while ‘Mining and Exploration’ is clearly
sharply for the tardy reporters to $27m. Average net the most tardy industry in releasing audited results
income per company per quartile shows the same with a mean of 160.5 days. This group is (in New
trend. Zealand) the most unprofitable of the 16 classifica-
tions as it is essentially comprised of companies
Industry groups and B-lags which are engaged in (at present) non-revenue pro-
Industry classifications are often not very convincing ducing activities.g
because of the difficulties associated with the alloca- Average figures, however, often cloud an accurate
tion of companies with diversified interests. The interpretation. Table VI provides some additional
Challenge Finance Investment Year Books contains information by identifying the distribution of B-lags
an up-to-date classification and this was selected to by industries across quartile one and quartile four.

8Znvestment Year Book I975: A Survey of Public Com-


panies Listed on the New Zealand Stock Exchange, gTherelativeprofitabilityof industries (as per the sampled
(Challenge Finance Ltd, Wellington, NZ, 1975) pp. 5-13. corporations) appears as a table in appendix D.
A C C O U N T I N G A N D B U S I N E S S RESEARCH
The obvious discrepancies with respect to lack of
TABLE VI symmetry or balance in profiles between the two
D i s t r i b u t i o n of B-Lags across Quartiles quartile groups lies in the ‘Finance, Investment,
1and 4 Insurance’ classification and in the ‘Service Indus-
Frequency of tries’. Finance-type companies tend to be prompt
Companies
Quartile 1 Quartile 4
reporters of audited information, perhaps because
they are not engaged in the annual time-consuming
1. Automotive 4 4 task of counting inventory. By contrast Service-type
2. Finance, Investment,
Insurance 11 3 industries are systematically tardy. Seven sub-
3. Building and Construction 5 6 categories are included in this classificationand all are
4. Chemicals, Paper and
Rubber 4 0
represented by at least one slow reporter: accom-
5. Communications 4 2 modation, catering, cleaning contractors, dry clean-
6. Electrical 2 1 ing and laundry, scientific and surgical equipment,
7. Television Rental 0 0 transport, and tourism.
8. Engineering and Capital
Equipment 3 4
9. Food, Drink, Tobacco 4 4
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10. Fuel and Energy 4 0 Conclusions


11. Pastoral 3 7
12. Printing, Publishing, Although this study has not pretended to represent
Packaging 3 4 an exhaustive treatment of corporate reporting lags
13. Retail 1 1
14. Service Industries 0 10
and corporate attributes, it is contended that some of
15. Textiles, Clothing 3 2 the more important aspects have been covered, at
16. Mining and Exploration 0 3 least insofar as the scope of information disclosed
- _ _
51 51
within annual reports allows. Further research could
- _ _ consider the relationship between B-lags and other
features such as the number of subsidiaries within an

TABLE V
D i s t r i b u t i o n of B-Lags across I n d u s t r y Classifications

Number of
Public Coefficient Mean Days
Listed Sample of Standard Per
Industry Classification Companies Size Variation Deviation Industry
1. Automotive 15 13 .51 42.4 83.3
2. Finance, Investment, Insurance 30 17 .51 31.8 62.4
3. Building and Construction 37 29 .36 30.3 83.1
4. Chemicals, Paper, Rubber 9 8 .31 19.6 62.5
5. Communications 11 7 .51 38.4 75.3
6. Electrical 15 12 .36 31.O 85.3
7. Television Rental 2 1 68.0
8. Engineering and Capital Equipment 18 16 .28 24.4 86.2
9. Food, Drink, Tobacco 20 17 .24 21 .o 86.2
10. Fuel and Energy 5 4 .32 12.3 38.5
11. Pastoral 23 19 .36 32.1 89.3
12. Printing, Publishing, Packaging 11 8 .29 26.0 89.3
13. Retail 17 12 .17 12.5 73.9
14. Service Industries 24 20 .27 26.7 100.7
15. Textiles, Clothing 19 17 .25 19.2 77.8
16.’ Mining and Exploration 8 4 .41 66.0 160.5

264 204 .39 32.3 82.6


WINTER 1976 53
entity, dividend policy, and the range and value of regarded as unsatisfactory as regards ‘timeliness’
current assets. Whether or not the B-lag of each as a qualitative objective of financial statements.
company is stable over time also needs to be 3. Fast reporters and slow reporters of audited
investigated. However, from the results of this financial information seem to differ with statistical
study a number of conclusions can be stated: significance with respect to profitability, at least
I. There appears to be an unusually high diversity insofar as profitability is considered at the absolute
of New Zealand corporate balance dates. It is level and by the ‘du Pont’ measures. Slow reporters
suggested that this could affect inter-company tend to be less profitable as a group than fast
comparability and thereby distort investor resource reporters.
allocation. 4. Fuel and Energy and Finance-type companies
2. The average interval of time between balance tend to be fast reporters as specific groups while
date and date of annual general meeting is 18 weeks, Service Industries and Mining and Exploration
12 of which purport to be absorbed by the audit companies tend to be slow reporters as specific
process of corporate accounts. This may be con- groups.
sidered practically unavoidable yet may still be
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APPENDIX A
Frequency Distributions of Corporate Reporting Lags

Weeks A-Lag B-Lag C-Lag D-Lag €-Lag


30+ 6 3
29 1 0
28 1 0
27 0 0
26 3 0
25 8 0
24 5 1
23 7 1
22 13 1
21 12 1
20 14 8
19 21 7
18 24 3
17 24 4
16 17 8
15 14 16 3
14 13 13 2
13 4 18 1 1
12 6 28 5 1
11 2 20 2 1 1
10 5 14 12 1 5
9 26 14 3 5
8 8 16 0 6
7 8 28 6 9
6 7 30 9 9
5 3 40 11 23
4 5 27 22 47
3 0 13 23 76
2 1 1 30 1
1 1 22
0 37
-1 11
-2 2
-3 0
4 2

TOTALS (Companies) 200 204 198 182 182

MEANS (Weeks) 18.2 11.8 6.3 2.1 4.0

MEDIANS (Weeks) 18 12 6 2 4
MODES (Weeks) 17-1 8 12 5 0 4
RANGES (Days) 53-243 8-21 8 7-1 66 (26)-91 12-119
54 A C C O U N T I N G A N D B U S I N E S S RESEARCH

APPENDIX B R E T U R N O N TOTAL ASSETS

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*:,
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I I I
0 I
I I 1 1

30 60 90 120 150 180 21 0

-5

-1 0

-1 5

-20

-25
.
WINTER 1976 55

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APPENDIX D
D i s t r i b u t i o n of Tax-Paid P r o f i t s a n d R e t u r n on T o t a l Assets across Industry Classifications
Weighted Average
Average Book Value Return on Total
Sample Total Tax- Profits (per Industry of Total Assets (per Industry
Industry Classification Size Paid Profits Company) Ranking * Assets Company) Ranking
%
1. Automotive 13 7,508,839 577,603 9 155,876,037 4.82 12

2. Finance Investment, Insurance 17 13,616,264 800,957 8 563,730,719 2.39 15

3. Building and Construction 29 39,471,968 1,361,102 3 585,743.1 68 7.1 2 3

4. Chemicals, Paper, Rubber 8 30,383,820 3,797,977 1 446,273,395 6.83 7

5. Communications 7 3,659,834 522,833 12 30,569,533 11.98 1

6. Electrical 12 4.942.853 41 1,904 14 78,356,702 7.08 4

7. Television Rental 1 565,273 565,273 10 6,676,565 4.90 11

8. Engineering and Capital Equipment 16 7,385,909 461.61 3 13 120,196,782 6.00 8

9. Food, Drink, Tobacco 17 25.81 2,950 1,518,409 2 470,240,823 5.04 10

10. Fuel and Energy 4 1,528,654 382,164 15 37.81 1,642 4.05 13

11. Pastoral 19 19,986,126 1,051,901 6 565,522,391 3.52 14

12. Printing, Publishing, Packaging 8 9,474,679 1.1 84,339 4 134,731,045 7.06 5

13. Retail 12 10.01 2,531 834,378 7 144,132,270 6.95 6

14. Service Industries 20 1,0806,169 540,308 11 194,838,429 5.54 9

15. Textiles. Clothing 17 18.1 39,925 1,067,054 5 224,457,677 7.30 2

16. Mining and Exploration 4 (295,975) (73,994) 16 8,277.91 7 -3.58 16

204 184,999.81 9 906,862 3,767,434,926 5.34

*The Spearman rank correlation coefficient of .28 is not significant at an alpha of .05.
Average absolute net incomes and weighted average returns on total assets produce significantly dissimilar rankings.