Do Lengthy Auditor Tenure and the Provision of Non-Audit Services by the External Auditor Reduce Audit Report Lags?

This study examines whether audit report lags (ARLs) are influenced by auditor tenure and the provision of non-audit services by the external auditor. Studying this association is important because ARLs are directly associated with audit efficiency and with the timeliness of companies' announcements of earnings. Our results show that both auditor tenure and non-audit services are significantly associated with ARLs. With regard to auditor tenure, we find that ARLs decline as auditor tenure lengthens, indicating that auditors with long tenure are able to audit their clients more efficiently. This finding suggests that auditor changes, mandatory or otherwise, impose additional costs on clients and increase informational inefficiencies in the form of delayed information to markets. With regard to non-audit services, we find that there is a significant negative association between non-audit service fees and ARLs, which suggests that the provision of non-audit services increases auditor learning, thus reducing audit delays.