The Impact of Sustainability Performance Disclosure in Reducing Information Asymmetry and Audit Report Lag An Empirical Study

Document Type : Original Article

Authors

1 Accounting Department-Faculty of Commerce-Cairo University

2 Faculty of commerce Cairo University

Abstract

The main objective of this research is to measure the impact of sustainability performance disclosure across its three dimensions (environmental, social, and governance) on information asymmetry and the audit report lag. Additionally, it aims to assess the role of information asymmetry as a mediating variable in the relationship between sustainability performance disclosure and the audit report lag. To achieve this, the researchers examined a sample of 116 non-financial companies listed on the Egyptian Stock Exchange, some of which are included in the S&P/EGX ESG sustainability index and others that are not, covering the period from 2018 to 2023, resulting in 696 observations. The analysis relied on the Pooled Regression Model (PRM) with the Ordinary Least Squares (OLS) method, incorporating random error correction, and utilized path analysis via multiple regression according to the Baron-Kenny method to test the indirect relationship. The results indicated a significant negative effect of sustainability performance disclosure on the audit report lag, a significant positive effect of information asymmetry on the audit report lag, and a significant negative effect of sustainability performance disclosure on information asymmetry. Finally, the Baron-Kenny regression analysis revealed a significant negative indirect effect of sustainability performance disclosure on audit report lag through the reduction of information asymmetry as a mediating variable.

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