Exploring the impact of key audit matters on audit report lag: insights from an emerging market

Purpose The purpose of this study is to examine the impact of key audit matters (KAMs) on the timeliness of financial statement reporting, measured as audit report lag (ARL), within the context of Kuwait's evolving financial market. Design/methodology/approach Using a sample of 136 unique firms and 841 firm-year observations over the period 2016–2022, the study employs a random effects model on a panel data set to examine the correlation between the number and type of KAMs disclosed in audit reports and the length of ARL. In addition, we employ sub-sample analysis and two-stage least squares (2SLS) regression to enhance overall reliability. Findings The results indicate a positive relationship between an increased number of reported KAMs and the length of ARL. Specific categories of KAMs, such as those related to investments and the implementation of new standards, also significantly impact the delay. Additionally, the findings reaffirm the importance of several determinants of ARL, which is consistent with prior research. Originality/value This study is among the first to offer new insights by examining the relationship between both the number and specific types and/or categories of KAMs on ARL in emerging markets.