Financial reporting timeliness and value relevance of accounting information

Corporate financial reporting timeliness is an important factor for sustainable economic growth. On average, Malaysian companies take four months to produce their audited financial reports, due to financial reporting lags, rather than three months as practice in other markets. The delay in producing financial report sends a bad signal to investors, and this would discourage foreign investment in Malaysia and this delay also may affect the value relevance of accounting information. Thus, the objective of this paper is to have an in-depth understanding on the effect of financial reporting timeliness (FRT) on value relevance and performance of the firm. Data on FRT, financial information and firm characteristics is collected from annual reports and Datastream. Sample of this study is 100 listed companies randomly selected from Main Board of Bursa Malaysia for the year 2018 to 2021. Data is analysed using panel data multiple regression analysis. Findings of the study reveal that the information on FRT has value relevance and investors emphasize more on earnings per share as compared to book value when pricing the share. Furthermore, firm performance proxied by return on assets (ROA) exhibits positive and significant relationship with FRT which indicates that firm with high accounting performance tends to shorten the period of FRT. The findings provide better understanding about the issue of FRT, the effect of FRT on value relevance of accounting information and firm sustainability. This study is timely to address the issue of timeliness in financial reporting which affects transparency and firm sustainability that enhance confidence of foreign investors to invest in Malaysia market.