Sustainability Disclosure and Audit Report Lag: Evidence from Listed Non-Financial Firms in Nigeria

Abstract

The study investigates the relationship between sustainability disclosure and the timeliness of audited financial reporting among listed non-financial firms in Nigeria. Specifically, it examined the impact of environmental, social, economic, and governance disclosures on financial reporting quality while controlling for firm size. The study employed a robust linear regression technique to analyse the data. Pre-estimation and post-estimation tests, including heteroskedasticity, multicollinearity, and autocorrelation tests, were conducted to ensure the validity and reliability of the regression results. This study employed an ex-post facto research design, and the data were sourced from the annual reports of one hundred and three (103) non-financial companies listed on the Nigerian Exchange Group spanning 2012 to 2023. Audit reporting lag was used to measure the timeliness of financial reporting, and it was measured as the time frame between a company’s financial year-end and the date the audit report was signed off by the independent auditor. A disclosure index was constructed through a binary content analysis of annual reports to measure the independent variable. The findings revealed that environmental disclosure and social disclosure exhibited statistically significant negative associations with financial reporting quality. In contrast, economic disclosure showed a significant positive relationship with financial reporting quality, suggesting that the demands of economic disclosures can lengthen the disclosure process. Governance disclosure, however, showed an insignificant negative relationship, implying that governance disclosures may not influence financial reporting. Additionally, firm size has a significant negative relationship with financial reporting quality. The study extends sustainability reporting research in Nigeria by focusing on the observable timeliness outcome.

Keywords: Sustainability Disclosure, Audit Reporting Lag, Financial Reporting Timeliness, Environmental Disclosure, Social Disclosure, Governance Disclosure, and Economic Disclosure.