The Impact of Corporate Attrib

International Journal of Economic Perspectives, 2017, Volume 11, Issue 1, 1720-1730.
The Impact of Corporate Attributes on the Timeliness of Financial

Reporting in Indonesia Stock Exchange
Sufiyati SUFIYATI
Faculty of Economic Tarumanagara University, Indonesia. sufiyati@fe.untar.ac.id.
ABSTRACT
The concept of timeliness in financial reporting has two dimensions. First, there is the frequency of reporting-the
length of the reporting period. Second, there is the lag between the end of the reporting period and the date the
financial statements are issued. Considerations regarding both of these aspects appear in the legislative and
regulatory provisions regarding corporate disclosure. This study has been investigated the empirical evidence of
influence profitability, size, financial leverage, liquidity, and age on the timeliness of financial reporting in
manufacturing companies listed on the Indonesia Stock Exchange during 2011 to 2013. The study used purposive
sampling method and obtained 195 companies. Processing the data in this study done by s SPSS oftware version
20.00 for logistic regression. The results showed that firm size have positive and significant effect on the timeliness
of financial reporting, while firm age have negative and significant effect on the timeliness of financial reporting.
Profitability, financial leverage, and liquidity has no effect on the timeliness of financial reporting.
JEL Classification: L20; L25; M48.
Keywords: Timeliness of Financial Reporting; Profitability; Size; Leverage; Liquidity; Age.
*Corresponding author.
INTRODUCTION
Financial report is a record of a company's financial information in the accounting period that describe the
company's financial performance to meet the needs of decision makers. Shareholders, management and creditors
require financial information company. According to the Statement of Financial Accounting Standards No. 1
(Adjustment 2014), the objective of financial statements is to provide information about the financial position,
financial performance, and cash flows of an entity that is useful to most users of financial statements in making
economic decisions. The financial statements show the results of management accountability for the use of
resources entrusted to them. (IAS-1) The financial statements used as the basis for decision making by the parties
concerned, therefore, the financial statements must be comparability, verifiability, understandbility and timeliness.
The demand for adherence to timeliness in the publish of financial statements in Indonesia has been regulated in
Circular Letter No. 29 of the Financial Services Authority /SEOJK.05/2015 and the Chairman of the Capital
Market Supervisory Agency and Financial Institution No. KEP-431 / BL / 2012 on submission annual report of
public company. This rule states that the issuer or public company registration statement has become effective in
submitting an annual report to the capital market and financial institution maximum of four (4) months after the
fiscal year ends. Companies that were late in submitting financial reports on a timely basis will be subject to
administrative sanctions and fines, in accordance with the provisions laid down by law.
Timeliness defined as a utilization of information by decision makers before the information lost the capacity or
ability to make decisions. Timeliness of financial reporting is an important qualitative characteristics of accounting
information which may affect whether this information is useful for those who read financial statements.
Timeliness of financial reporting increase the usefulness of the financial information. An information categorized
as relevant information if the information is available in time for the decision makers before they lose the
opportunity or ability to influence decisions. Information is irrelevant if it is not released on time and become
obsolete information where such information loses value in influencing the quality of decisions. Delay of financial
reports reduces the information content and the relevance of the information (Ettredge et al, 2006). This reflects
the importance of timeliness of the financial statements to the public. Relevant information if the information has
predictive value, the value of feedback and provided timely. The accounting profession recognizes that the
accuracy of financial reporting is an important characteristic of financial accounting information for users of
accounting information and for regulatory agencies and professional (Soltani, 2002).
International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

http://www.econ-society.org
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2. LITERATURE REVIEW
Previous research studies confirmed the significant role of financial and capital markets in the economies (Shaeri
et al., 2016; Siddiqui, 2008; Kaushal & Pathak, 2015; Kuryanov, 2008; Michailidis, 2008; Nazlioglu et al., 2009;
Rjoub, 2011; Roy, 2012; Saqib & Waheed, 2011; Tanasie et al., 2008; Agu, 2008; Barisik & Tay, 2010; Berument
& Dogan, 2011; Dalgin et al., 2012; Elmas, 2009; Hachicha, 2008; Kalim et al., 2012; Gokgoz, 2007;Khakimov
et al., 2010; Soukhakian, 2007a; 2007b; Fethi & Katircioglu, 2015; Katircioglu et al., 2015; 2007; Gungor et al.,
2014; Heidari et al., 2013; Bayram, 2007a; 2007b; Karacaer & Kapusuzoglu, 2010; Sodeyfi & Katircioglu, 2016;
Buyuksalvarci & Abdioglu, 2010; Chandio, 2014; Chimobi, 2010; Sodeyfi, 2016; Katircioglu & Taspinar, 2017;
Waheed & Younus, 2010; Fethi et al., 2013a; 2013b; Katircioglu, 2012; Katircioglu & Feridun, 2011; Gungor &
Katircioglu, 2010; Jenkins & Katircioglu, 2010; Adaoglu & Katircioglu, 2010). Agency theory explains the
relationship between the agent with the principal. In agency relationship there is a contract in which the principal
rule the agent to perform a service on behalf of the principal and authorized agent to make the best decisions for
the principal. Agency theory reflects the basic structure of principal and agent involved in cooperative behavior,
but it has a different purpose and attitude towards risk. Agency theory assumes that principals because of the
asymmetry of information can not adequately observe the actions of their agents who take advantage (Barac and
Klepo, 2006). The most important basis of agency theory is that managers are generally motivated by their own
personal benefit and work to exploit their own personal interests rather than considering the interests of
shareholders and maximizing shareholder value. (Emeh, 2013). In the case of timely of financial statements to the
public, the agent responsible for the timely manner in performing their rights and obligations to the public that the
company's annual financial reports principal to public. Timeliness or not the submission of annual financial
statements are also determined by the performance and operations of the company principals run the agent
(management company). Agency theory gives the basic pillars for the role of accounting in providing information
and associated with the role of stewardship accounting, so it provides accounting as the value of feedback between
the agent and the principal in addition to their productive value. The agency theory implies the asymmetry
information, when not all the circumstances known to the parties and as a result there are consequences that were
not considered by the parties. One way to reduce information asymmetry is the presentation of financial statements
on time (Owusu and Leventis, 2006)
The basic objective of financial reporting is to provide information that is useful to investors, creditors and other
users in making economic decisions. Stakeholders including a large group of participants, which anyone has a
direct or indirect "shares" in the company. Direct stakeholders are the shareholders, investors, employees, suppliers
and customers whose interest with performance company. Indirect stakeholders include governments, which have
been indirectly affected by the functioning of the company (Kiel & Nicholson 2003). Clarke (2004) defines the
Stakeholder theory is the organization as a multilateral agreement between the company and stakeholders. The
relationship between the company and internal stakeholders (such as owners, managers, employees) are limited
by the rules of formal and informal relationships developed through history. External stakeholders (customers,
suppliers, and communities) are equally important, and are also limited by the rules of formal and informal.
Stakeholders require current information to make decision and prediction. The information should be available to
them when they need it. Timeliness of financial reporting plays an important role in this regard. The theory of
stakeholders’ maximization of value.
Financial statements are an important source of information for investors and shareholders (Alam and Rashid,
2014). Timeliness shows the time span between the presentation of information desired and the frequency of
reporting information. With investment growth and increasing complexity of business operations and, investor
demand information that is more timely and more relevant. (Vuran, 2013). The company's financial reporting on
time is an important element for the capital markets to function properly. Timely reporting in emerging markets is
very important because it is relatively limited market information and have a longer lag time (Errunza and Losq,
1985). Timely reporting improved decision making and reduce information asymmetry in this market. Delays in
reporting financial statements increases the uncertainty associated with the investment decision (Ashton et al,
1987). If the information is not submitted financial reports on time, the information loses its value in influencing
the quality of decisions. With the distance of time that is shorter between the end of the accounting period to the
date of submission of financial statements, the more advantages to be gained from such financial statements
whereas the longer the period between the end of the year with the submission of financial statements, the higher
the possibility that information may be leaked to the interested parties. Timely reporting reflects managerial
efficiency and effectiveness.

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The profitability of a company reflects the level of effectiveness achieved by an operational company (Owusu-
Ansah 2000). Profitability indicates good or bad news generated from operating companies (Ashton et al., 1987).
Manager would be more willing to report the good news faster than bad news (Chambers and Penman, 1984; Ng
and Tai, 1994). Good news will affect stock prices and other indicators and also will reduce the reporting lag.
Announcing the good news will attract potential investors and existing investors to maintain their investment while
announcing bad information will divert potential and existing investors to maintain their investment. Lower
profitability indicates that the level of performance of the company's management is not good. Businesses lose has
negative impact on the market's reaction and decrease its assessment of a company's performance. Profitability is
high, it means that the company's financial report contains good news and tended to submit its financial statements
in a timely manner.
A few literatures explain that there is no association between profitability with timeliness of financial statements
(Dyer & McHugh, 1975; Davies & Whittred, 1980; Hashim et al., 2013; Merdekawati, I. Arsjah, R. J.2011 and
Mahajan & Chander, 2008). The results of previous studies showed that the profitability have a negative effect on
the timeliness of financial reporting (Abdullah (2006), Al Jabr (2006), Conover, Miller, & Szakmary (2008), Haw,
Qi, & Wu (2000), Al-Ajmi (2008), Iyoha, FO (2012), Ku Ismail & Chandler (2004), Owusu-Ansah (2000) and
Dogan et al. (2007)). Based on the literature that mentioned above, the first hypothesis is presenting as follow:
H1: Profitability has significant effect on timeliness of financial reporting.
Company size measured by total assets. Large companies have the ability to monitor the management and work
together effectively to oversee the running of the company (Persons, 2006). Large firm size is associated with
better performance because they have better management, better use of technology. Large companies take less
time to publish financial report for their supervision of investors and the public eye. Large companies have good
internal control systems, strong internal audit systems and has a greater ability to speed up the audit process. They
have more accounting staff and sophisticated accounting information system to produce an annual report that is
more timely (Owusu- Ansah, 2000). Thus, large companies tend to submit financial statements on time than
smaller companies. Large company followed by more financial analysts who expect to release financial
information on timely. The results of previous studies on the effect of firm size and timeliness are mixed. Some
literatures found that the large companies submit theire financial statements on time (Abdelsalam and El-Masry
(2008), Courtis (1976), Gilling (1977), Lont and sun (2006), and Simnett, Aitken, Choo, and Firth (1995), found
the result that there is no associate between firm size with timeliness. Abdulla (1996), Carslaw and Kaplan (1991),
Dyer and Hugh (1975), Chambers and Penman (1984), Davies and Whittered (1980), Ezat and El-Masry (2008),
Givoly and Palmon (1982), Ng and Tai (1994), Bamber, Bamber, and Schoderbek (1993), Owusu-Ansah (2000),
and Ku-Ismail & Chandler (2004)). Based on the literature that mentioned above, the second hypothesis is
presenting as follow:
H2: Size has significant effect on timeliness of financial reporting.
Leverage describes the company's ability to pay all short term liabilities and long term liabilities (Supriyati and
Rolinda, 2007). Leverage indicates the company's financial debts. Ashbaugh-Skaife (2006) explain the weak
corporate governance can result in higher debt financing. Companies with high leverage is expected to disclose
more information, required by financial institutions to monitor the company's ability to pay its debts. The higher
leverage company showed that the level of debt the company is high but it also shows that the greater degree of
financial risk that will be experienced by creditors and shareholders. Companies that have a high leverage rate
indicates that the company is experiencing financial difficulties (financial distress), and is bad news for the
company. Thus, companies tend to be delay in submitting their financial statements. Meanwhile, the company is
a low degree of financial leverage is likely to be timeliness in submitting their financial statements. Mahajan &
Chander (2008) and Tan & Tower (1997) found that leverage does not effect on the submission of the financial
statements. Some literatures found that the leverage has significant effect on the timeliness of financial reporting
(Khasharmeh and Aljifri (2010) Ku Ismail & Chandler (2004), Ahmed & Nicolls (1994), Jaggi and Low (2000),
Abdullah (2006) and Hossain et al., (1994)). Based on the literature that mentioned above, the third hypothesis is
presenting as follow:
H3: Leverage has significant effect on timeliness of financial reporting.
The liquidity ratio can be used to measure a company's ability to meet or pay obligations that must be met. The
current ratio is used measure for evaluating a company's liquidity and short-term debt-paying ability. (Kieso,
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2011). Shareholder uses liquidity to evaluate future cash dividends. High liquidity show smaller risk of company
failure. High liquidity shows the company has a high ability to pay short-term obligation (Hilmi and Ali, 2008).
High liquidity indicates good news that companies are likely to report financial statement information in a timely
manner. Prastiwi (2014) and Mahajan & Chander (2008) examined that liquidity does not effect on the timeliness
of financial reporting. While other literatures found that liquidity has significant effect on the timeliness of
financial reporting (Wang, J., & Song, L. (2006). Khoda Moradi et al (2012) Vuran, B, Adiloglu, B. (2013), Hilmi
and Ali (2008). Herlyaminda et.al (2013) and Ezat & El-Masry (2008)). Based on the literature that mentioned
above, the fourth hypothesis is presenting as follow:
H4: Liquidity has significant effect on the reporting timeliness of financial.
Companies that have an older age tend to be more skilled in collecting, processing, and produce information when
needed. Their accountant has learned the delay in submission of financial statements can be minimized. The older
companies are more expert in processing and release of information when it's needed because it has a lot of
experience. Companies also tend to have flexibility in dealing with the changes that will occur. Older companies
have strong internal controls procedures. Younger companies tend to have less experience in accounting control
(Hope and Langli, 2008). Age of company has the potential to reduce the reporting lag. Al Jabr, (2006), Courtis
(1976), and Chander Mahajan (2008) found no correlation between a company's age and timeliness of financial
reporting. Owusu-Ansah (2000) and Iyoha, F.O. (2012) found age effects on the timeliness of financial reporting.
Based on the literature that mentioned above, the fifth hypothesis is presenting as follow:
H5: Size has significant effect on the timeliness of financial reporting.
In the following sections, we will explain testing the hypotheses.
3. METHODOLOGY
Sample of this study is included 195 companies listed in Indonesia Stock Exchange in 2011 to 2013. Profitabilitas
measured by Return On Asset. Size is measured by total assets. Leverage use Debt to Equity Ratio, liquidity is
measured by the current ratio. Age is measured by the length of companies listed on the Indonesia stock exchange.
timely submission of financial statements is measured using a dummy variable, which for the company that
timeliness in financial reports rated 1 and for companies that do not timeliness in financial reports rated 0. Logistic
regression model are as follows:
TR = + 1 ROA + 2 Size + 3Lev + 4 CR + 5 Age + e (1)
Where, is intercept, i are indicators and CR stands for liquidity.
4. RESULT AND DISCUSSION
Table 1 shows the number of companies that released the timeliness of financial reports. Based on the results of
Table 1, there are 132 companies (67.69%) in 2011, there are 129 companies (66.15%) in 2012, and there are 135
companies (69.23%) in 2013. In addition, the number of companies that delivered the report late, there are 63
companies (32.31%) in 2011, there were 66 companies (33.85%) in 2012, and there were 60 companies (30.77 %)
in 2013.
Table 1. Distribution Businesses Delay and Timeliness of Financial Reporting
Years
2011 2012 2013
Category Amount % Amount % Amount %
Timely 132 67,69 129 66,15 135 69,23
Delay 63 32,31 66 33,85 60 30,77
Total 195 100% 195 100% 195 100%
Table 2 shows the test results of descriptive statistics. Descriptive statistical analysis is an overview of statistical
data such as mean, minimum, maximum and standard deviation.

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Table 2. Descriptive Statistics
N Minimum Maximum Mean Std. Deviation

TR 195 0 1 ,68 ,469
Profitability 195 ,0000 ,7151 ,109231 ,1050888
Size 195 8,6043 14,3304 12,174573 ,8379078
Leverage 195 -27,05 7,40 ,8651 2,22570
Liquidity 195 ,2224 247,4441 3,846424 18,0569907
Age 195 1 36 18,11 6,525
Valid N (listwise) 195
Regards to Table 2, Timeliness has a minimum value which is 0, maximum value is 1, the mean value is 0,68 and
standard deviation is 0,469. Profitability has a minimum value which is 0,0000, maximum value is 0,715, the
mean value is 0,109231 and standard deviation is 0,1050888. Size has a minimum value which is 8,604, maximum
value is 14,330 , the mean value is 12,1745 and standard deviation is 0,83790. Leverage has a minimum value
which is -27,05, maximum value is 7,40 , the mean value is 0,8651 and standard deviation is 2,225. Liquidity has
a minimum value which is 0,222 , maximum value is 247,444, the mean value is 3,846 and standard deviation is
18,056. Age has a minimum value which is 1, maximum value is 36 , the mean value is 18,11 and standard
deviation is 6,525 .
Table 3. Hosmer and Lemeshow Test
Step Chi-square df Sig.
1 12,134 8 ,145
Table 3 shows significan value which is 0,145 and greater than 0,05, it can be concluded that the logistic regression
model is feasible for subsequent analysis due to real difference between the predicted classifications an the
observed classification.
Tabel 4. Hypothesis Test
B S.E. Wald df Sig. Exp(B) 95% C.I.for

EXP(B)
Lower Upper
Profitability 3,393 1,928 3,096 1 ,078 29,759 ,680 1303,205
Size ,622 ,223 7,754 1 ,005 1,863 1,202 2,887
Step Leverage -,053 ,085 ,393 1 ,531 ,948 ,803 1,120
1a Liquidity ,147 ,111 1,770 1 ,183 1,159 ,933 1,440
Age -,067 ,028 5,609 1 ,018 ,935 ,885 ,989
Constant -6,221 2,652 5,505 1 ,019 ,002
a. Variable(s) entered on step 1: X1, X2, X3, X4, X5.
The probability is hypothesized to have association with timeliness of financial reports. The test result of
hypothesis H1 is rejected. The means that there is no significant effect of profitability on timeliness reporting at
5% significiance level. The positive direction of the sign is consistent with extant literature. High profitability
would tend to disclose their financial report in a timely way. This study has falied to prove that profitability has
effects on timeliness reporting. The results are paralell with the study of Dyer & McHugh (1975), Davies
&Whittred (1980), Hashim et al. (2013), Merdekawati, I. Arsjah, R. J. (2011) and Mahajan & Chander (2008).
Size is hypothesized to have association with timeliness of financial reports. The test result of hypothesis H2 is
accepted. The finding supports the hypothesis that there is a positively significant associated size on the timeliness
reporting at 5% significiance level. Large firm size has better performance because they have better management,
better use of technology, has a system of internal control, internal audit is strong and has a greater ability to speed
up the audit process. Large companies take less time to produce an annual report that publishes financial report
timeliness.

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The test result is successfully support the researches of Abdulla (1996), Carslaw and Kaplan (1991), Dyer and
Hugh (1975), Chambers and Penman (1984), Davies and Whittered (1980), Ezat and El-Masry (2008), Givoly and
Palmon (1984), Ng and Tai (1994), Bamber, Bamber, & Schoderbek (1993), Owusu-Ansah (2000), and Ku-Ismail
& Chandler (2004). Leverage is hypothesized to have association with timeliness of financial reports. The test
result of hypothesis H3 is rejected. The inference is that leverage as an attribute does not significantly impact on
the timeliness of financial reporting at 5% significiance level. Though not significant, the negative direction of the
sign is consistent with extant literature. This result suggests that audit of debt capital is more time consuming than
that of equity capital. Highly leveraged companies must to disclose more information, firms report more slowly.
The result of this hypothesis is in line with Mahajan and Chander (2008) and Tan & Tower (1997). Liquidity is
hypothesized to have association with timeliness of financial reports. The test result of hypothesis H4 is rejected.
The results reveal that the impact of liquidity on the timeliness is not significant at 5% significiance level.
This study has failed to prove that liquidity has effects on timeliness reporting. The result of this hypothesis is
parallel with the study of Prastiwi (2014) and Mahajan & Chander (2008). Age is hypothesized to have association
with timeliness of financial reports. The test result of hypothesis H5 is accepted. The finding in this study that
there is a negatively significant associated age on the timeliness reporting at 5% significiance level. Fewer control
weaknesses that could cause reporting delays are expected in older firms. Recruiting qualified and experienced
accounting staff may not be an easy option for the companies. Finally, the financial report would be delayed. The
test result is successfully support the researches of Owusu-Ansah (2000) and Iyoha, F. O. (2012).
5. CONCLUSION
The objective of financial statement is show about financial performance and financial position that is useful for
user in making economic decision. Timeliness of financial reporting is a significant issue for users of financial
statements. The usefullnes of publised financial reports depends on their information. The main objective of this
study was to examine the impact of corporate attribute on the timeliness of financial reporting in Indonesia. The
samples are 195 companies listed in Indonesia Stock Exchange in 2011-2013. Based on the result of logistic
regression analysis, this studi provided that size and age have significant effect on the timeliness of financial
reporting at 5% significiance level. Probability, leverage and liquidity have not significant effect on the timeliness
of financial reporting at 5% significiance level.
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International Journal of Economic Perspectives, 2017, Volume 11, Issue 1, 1720-1730.

The Impact of Corporate Attributes on the Timeliness of Financial

JEL Classification: L20; L25; M48.

Keywords: Timeliness of Financial Reporting; Profitability; Size; Leverage; Liquidity; Age.

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

H1: Profitability has significant effect on timeliness of financial reporting.

H2: Size has significant effect on timeliness of financial reporting.

H3: Leverage has significant effect on timeliness of financial reporting.

H4: Liquidity has significant effect on the reporting timeliness of financial.

H5: Size has significant effect on the timeliness of financial reporting.

In the following sections, we will explain testing the hypotheses.

TR = + 1 ROA + 2 Size + 3Lev + 4 CR + 5 Age + e (1)

Where, is intercept, i are indicators and CR stands for liquidity.

4. RESULT AND DISCUSSION

Table 1. Distribution Businesses Delay and Timeliness of Financial Reporting

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

Table 2. Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

Table 3. Hosmer and Lemeshow Test

Step Chi-square df Sig.

Tabel 4. Hypothesis Test

B S.E. Wald df Sig. Exp(B) 95% C.I.for

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

International Journal of Economic Perspectives ISSN 1307-1637 © International Economic Society

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