The Timeliness of UK Private Companies Financial Reporting

Mark A. Clatworthy
Cardiff Business School
Cardiff University
Aberconway Building
Colum Drive
Cardiff
CF10 3EU
UK
ClatworthyMA@cardiff.ac.uk

Michael J. Peel
Cardiff Business School
Cardiff University
Aberconway Building
Colum Drive
Cardiff
CF10 3EU
UK
Peel@cardiff.ac.uk

FIRST DRAFT: PLEASE DO NOT QUOTE

The Timeliness of UK Private Companies Financial Reporting

Abstract
Timeliness is an important qualitative characteristic of accounting and is a fundamental
element of the relevance of financial reporting information. In this paper, we use a large
sample of UK private companies to investigate whether corporate governance characteristics
impact upon the timeliness of financial reporting information. We also study the link between
the reliability and timeliness of financial reporting information, since it is often argued that
these are inversely related. Although private companies are typically closely held, meaning
that communication with outside shareholders is less important, private companies still rely
heavily on outsiders such as banks and trade creditors for long and short term financing;
moreover, recent research shows that these outsiders rely on financial statements for
information about the status of their claims. After controlling for various firm characteristics,
we find that the presence of a professionally qualified accountant on the board, the proportion
of women on the board, the size of the board and the presence and quality of an auditor all
enhance financial reporting timeliness. We also find that firms that file less reliable
information are more likely to be less timely in their filing of their accounts.

The Timeliness of UK Private Companies Financial Reporting

1. Introduction
Timeliness is a fundamental characteristic of the financial reporting of information to agents
to enable them to make informed decisions about an entity. Information potentially loses
relevance with age and extended delays in the availability of financial statement information
render the information less useful for economic decision making. Although regulatory
requirements and pressures exert a significant influence over financial reporting timeliness,
there remains considerable discretion over when firms release their financial statement
information within regulatory windows. In this paper, we examine the extent to which timely
financial reporting information of UK private companies is influenced by corporate
governance characteristics, together with a number of additional corporate and accounting
characteristics.
In line with research showing that corporate governance affects the timelines of loss
recognition (Lara et al., 2009), using a large sample of UK private companie s reporting under
two regulatory timeliness regimes, we find that various board and corporate governance
characteristics have an important effect on reporting timeliness. In particular, gender diversity
amongst board members, board size, auditor quality and the presence of a board member with
a professional accounting qualification all have a significant impact on the timeliness with
which companies file their annual financial statements. Our results are generally robust to a
number of different samples and variable definitions and to an estimator (count [negative
binomial] regression) that is more appropriate than the standard OLS regression used in prior
research.

Numerous prior studies have conducted empirical analyses of the timeliness of public
companies financial information; however, there have been few studies of what drives timely
disclosures by private companies. This is surprising since the conceptual frameworks of
standard setters often make little or no distinction between public and private firms,
suggesting that the link between relevance and timeliness remains important irrespective of
corporate legal form. Importantly, the focus of past research upon the financial reporting
characteristics of companies with (principally equity) securities traded on public markets is
changing and increasing research attention is being paid to the role of debt providers in
shaping financial reporting characteristics (Ball et al., 2008) and to the significant role that
private companies play in the economy. For instance, Hope et al. (2010) point out that the
aggregate value of total assets of private companies exceeds that of public companies in most
countries.
The paper contributes to the literature on financial reporting timeliness in a number of
important ways. First, our study represents the first empirical examination of the timeliness of
private companies financial reporting information. Despite the fact that private companies
are not subject to stock market pressures for timely financial reporting information, they still
often rely extensively on outside debt finance, providers of which require timely information
for their financial decision making (e.g. Collis, 2008; Peek et al., 2010). Second, our model
includes a number of potentially important corporate governance characteristics that
potentially influence reporting timeliness yet have not previously been examined in empirical
research. For example, although recent studies have assessed the impact of board gender
diversity on governance and performance, there is little evidence on their impact upon
financial reporting processes. Moreover, while several studies have tested for the effects of
professional expertise within large companies, little is known about the impact of such
expertise on smaller private firms, where the marginal effect could well be higher than in very

large, complex entities. Similarly, since our sample includes companies that are not required
to have their accounts audited, we are able to assess the effects of statutory audits on the
relevance of the accounting information; together with the quality of the auditor.
Our research represents the first examination of the effects of firms filing their
financial statements under a new regulatory regime. Following an EU initiative to improve the
speed with which companies make information in their financial statements available to users,
a new statutory reporting regime (the Companies Act 2006) for UK firms was introduced in
April 2008. Under this regime, the maximum statutory period permitted for private companies
to file their accounts before incurring penalties was reduced from 10 to 9 months. Our sample
covers filings under both the old and new reporting regimes. We are therefore able to provide
a novel examination of the impact of a regulatory change, aimed at improving the utility of
financial reporting, on corporate reporting behaviour in practice.
A further noteworthy feature of the study relative to previous research is the large
number of degrees of freedom available in estimating the statistical models. Our initial
sampling frame is the population of available private UK companies. This is important, since
the regulatory reporting framework of private firms is less uniform than for their public
counterparts. Small companies meeting the statutory definition need only file abridged
accounts (in the form of a summary balance sheet), and their accounts are not required to be
audited; whereas those classified as medium sized are permitted to omit the sales figure from
the profit and loss statement. However, in both cases full statements may be voluntarily filed;
and in any event a profit and loss account and balance sheet must be prepared for the
company members. Initially, as well as controlling for firm size, we include variables to
capture any variations in the reporting lag due to these factors; but also estimate models on
sub-samples of firms reporting profit data.

Finally, we contribute to the literature in this area by employing a more appropriate

regression estimator. Previous studies have estimated the relationship between the reporting
lag of annual accounts and corporate size in log terms using ordinary least squares (OLS)
regression. However, because of the nature of the dependent variable (i.e., the number of days
between companies year end and release of their accounts to the public via filing at
Companies House), there are alternative techniques that are more suitable for this setting. For
comparison with previous studies, we report results using OLS; but in addition, we provide
novel empirical analyses using a (negative binomial) count regression technique. Such
estimators are specifically formulated to account for the nature and distribution of cardinal
discreet dependent variables limited on the lower side, but with no upper boundary) such as
the one employed in the current study.
The remainder of the paper is set out as follows: the next section outlines the legal and
regulatory reporting regime faced by private and public (listed and unlisted) UK companies,
together with prior theoretical and empirical research into the factors that influence reporting
timeliness. Section 3 describes our data and methods, while our main results are presented in
section 4. Section 5 concludes the paper with limitations and suggestions for further research.

2. Prior Literature and Regulatory Requirements

2.1 Prior research on the timeliness of financial reporting information
It has long been recognised in numerous standard setters Conceptual Frameworks that
accounting information should be timely in order for it to be useful to financial decision
makers. For example, the second Concepts Statement of the US Financial Accounting
Standards Board (FASB, 1980) included timeliness as one of the three components of the
primary decision-specific quality of relevance. It stated (para. 56) that If information is not
available when it is needed or becomes available only so long after the reported events that it

has no value for future action, it lacks relevance and is of little or no use. In the UK, as
pointed out by Davies et al. (1999, p. 86) the Corporate Report of the (then) Accounting
Standards Steering Committee stated that in order to fulfil their primary objective and be
useful, corporate reports should be relevant, understandable, reliable, complete, timely and
comparable (emphasis added). The present status of timeliness in the IASB Conceptual
Framework is somewhat less prominent, though as a constraint on the main qualitative
characteristics of financial reporting information, relevant and reliable information, it remains
important.
Despite its importance to standard setters, there have been relatively few systematic
theoretical analyses of timeliness. One of the earliest examinations is by Feltham (1972), who
shows, from an information economics perspective, that an information system having a
shorter reporting delay than another is more informative provided that both systems ultimately
report the same information. The latter assumption is crucial since it assumes that the
reliability of information is constant irrespective of the timeliness, which might not hold in
practise due to timeliness/accuracy trade-offs. Hence, although it is perceived as important, it
should be noted that timeliness is not an overriding objective of financial reporting due to the
potential trade offs between the timeliness of information and its quality. Both standard setters
(e.g. FASB, 1980) and academics (e.g. Suphap, 2004) recognise that preparers of accounts
may sacrifice the reliability of information by focusing excessively on timeliness. Ultimately,
however, as noted by Bromwich (1992), a lack of timeliness may cause information to have
zero utility for decision making and/or information becoming available from other sources. 1
Such late information may result in misallocation of capital where outside investors and
creditors face serious adverse selection and moral hazard problems (Leventis and Weetman,
2004). Even in the case of private companies, where there is less of a separation of ownership
1

Bromwich (1992) also points out, however, that timeliness is not always deemed an absolute characteristic
from an information economics perspective only where a decision made conditioned upon early access to the
information yields greater welfare to the decision maker than late access.

and control, the timeliness of information is still potentially important to outside creditors and
to those (albeit less frequently) with external shareholders.. Like timely loss recognition, it
can affect the speed with which debt covenant restrictions are imposed which cause control to
shift from managers to lenders in order to limit actions such as dividend payouts and further
borrowing (Ball and Shivakumar, 2005).
To summarise, we cannot improve on Davies and Whittreds (1980: 48-49) view that
Irrespective of whether one chooses to call timeliness an objective of accounting or an
attribute of useful accounting information, it is clear that both the disclosure regulations and a
large part of the accounting literature adopt the premise (either implicitly or explicitly) that
timeliness is a necessary condition to be satisfied if financial statements are to be useful.
Although the theory in this area is not particularly well developed, several studies
have examined the factors that influence timeliness. One of the earliest studies of the factors
affecting reporting timeliness is by Dyer and McHugh (1975), who investigate determinants
of the reporting lag for 120 Australian companies listed on the Sydney Stock Exchange. Inter
alia, larger companies are hypothesised to be associated with shorter delays due to the
economies of scale in preparing financial statements and that more profitable companies are
associated with more timely reporting due to bad news taking longer to be disclosed. They
find support for the size hypothesis, but little evidence that profitability influences reporting
timeliness.
In a later study of the timeliness of Australian corporate annual reports Whittred
(1980) finds that companies receiving first time audit qualifications are associated with
significantly longer reporting lags than companies with clean audit reports; moreover, the
more serious the qualification, the longer is the reporting delay. More recently in a study of 47
companies listed on the Zimbabwe Stock Exchange, Owusu-Ansah (2000) reports that

corporate size, profitability and age are associated with variation in financial reporting
timeliness, but no evidence was found that gearing influences timeliness.
Leventis and Weetman (2004) argue that the decision of whether to report in a more
timely fashion is akin to voluntary disclosure and apply general disclosure theories of
Diamond (1985) and Verrecchia (1983; 1990) to the issue of timeliness. They find that
proprietary costs, information cost savings and the extent of favourable or unfavourable news
disclosures contained in the information are all factors influencing reporting the reporting lag
of Greek listed companies. Although corporate size was found to be statistically insignificant,
whether or not the firm underwent a public issue of shares, change in profitability, industry
concentration and the number of remarks in audit reports were found to be significant
determinants of financial reporting timeliness.
In a comparison of multinational and domestic companies, Lee et al. (2008) find that
the audit delay is more significant for multinational firms due to their more complex nature.
However, their overall reporting lag was shorter than for their. Furthermore, companies
reporting a loss, with high gearing, bad news, more reportable segments and with
extraordinary items (the latter two items representing complexity) were associated with a
longer reporting lag, whereas larger companies with a big 4 auditor reported more quickly
overall.
Although prior studies are based on public listed companies, where the timely release
off information is essential for the efficient operation of capital markets, the general theory
(and associated categories of explanatory variables, where relevant to private firms) relating
to the timely reporting of annual accounts applies equally to our sample of firms. As noted
above, Leventis and Weetman (2004) contend (in line with empirical evidence) that there is a
voluntary element (management discretion) to the timeliness lag. However, in recognition of

the importance of time-relevant information, this is generally curtailed by statutory/regulatory

intervention.
The legal requirements for UK companies filings are set out in the 2006 Companies
Act, which represented a major overhaul of British corporate law, updating the 1985
Companies Act. However, the provisions in 2006 Act relevant to this study are only
applicable for financial years beginning on or after 06 April 2008. The UK Government made
these changes partly in response to the Company Law Review, which recommending filing
times should be reduced in order to reflect improvements in technology and the increased
rate a which information becomes out of date (RIA, 2007 p.35). On the introduction of the
new regime, the normal time (to avoid penalties) allowed for filing accounts was reduced
from 10 months under the 1985 Act to 9 months for a private company (and from 7 months to
6 months for public companies). The lower limit for public firms is a clear reflection of their
(generally) wider responsibility to shareholders (e.g. UK firms quoted on the Main Market
must additionally disclose their annual reports and accounts to the London Stock Exchange
(and via their web site) within 4 moths to avoid market regulatory penalties). However, other
thing equal, private companies have more discretion over their timeless (at least until
penalties are incurred) than their public counterparts.
Increased penalty bands apply to accounts delivered late on or after 1 February 2009,
whether filed under the Companies Act 1985 or the Companies Act 2006 (penalties for late
submission of accounts under the Companies Act 2006 are for financial years beginning on or
after 6 April 2008). These range from 150 for being up to one month late, to 1500 for
accounts being filed more than 6 months late (the corresponding minimum and maximum for
public companies are 750 and 7,500). These amounts are doubled in cases where the
accounts are filed late under the Companies Act 2006 and the previous years accounts under
the 2006 Act (i. e. for a financial year beginning on or after 6 April 2008), were also late.

Company directors may also be prosecuted (i.e., it is a criminal offence) for the non/late
submission of their annual accounts in addition to incurring the above penalties

2.2 Model development

Our main area of interest in this study is upon the extent to which reporting timeliness is
influenced by corporate governance characteristics, though our model also captures a number
of additional important accounting variables, together with a suitable vector of controls.
Recent research by Lara et al. (2009) finds, inter alia, that the timeliness of earnings, i.e.
conditional conservatism, is associated with firms corporate governance. They note that
improved corporate governance results in better monitoring of managers actions and because
conservatism results in lower litigation risk for directors, auditors and managers, they predict
(and find) a positive association between the strength of corporate governance mechanisms
and earnings timeliness. This is attributed to the prediction that those involved in the financial
reporting process regard earnings timeliness as a desirable attribute of accounting information
and will therefore favour its implementation. Although we do not study earnings (loss
recognition) timeliness, our intuition is similar to that of Lara et al. (2009) and indeed with the
implicit assumption of standard setters noted above that timeliness of accounting information
is an important and desirable qualitative characteristic (ceteris paribus) and that corporate
governance mechanisms should respond to pressures from outside providers of finance.
Even though private companies are by their very nature less widely held than public
companies, a large proportion of their finance comes in the form of debt and, as shown by
Collis (2008) and Peek et al. (2020), lenders and creditors often rely on financial statement
data for assessing the status of their claims and in contracting. That the companies we
examine are typically small with relatively few directors (median board size of 3) means that

any marginal effect of corporate governance attributes may well be more clearly discernible
than in larger, listed companies.
Our first experimental corporate governance variable is the presence of a director on
the board with a professional accounting qualification. The companies we study are not
regulated by the same regulation as listed companies and therefore, it is not necessary for
them to have an audit committee, let alone a member of an audit committee with financial
expertise. 2 The qualified board members we observe are therefore appointed by companies
without regulatory intervention. We are aware of no previous studies into the effects of
financial expertise on financial reporting timeliness, though we hypothesise that as such board
members are able to offer advice and participate in the preparation of the financial statements,
that the effect of the presence of an accountant on the board will be to reduce the time
between the comp anys year end and the filing at Companies House i.e., the date on which
the reports are made available to the public. We note, however, that related research into
information reliability (as opposed to our focus on a subset of information relevance) has
produced inconclusive results, with Jeanjean and Stolowy (2009: 379) noting Some studies
actually show and inverse relationship between expertise and the likelihood of financial
reporting regularities, earnings management and restatements in the United States.
The second corporate governance variable we study is the proportion of female
members of the board. Increasing regulatory attention is being paid to the gender balance of
boards of directors and its effects (e.g. Nielsen and Huse, 2010), especially due to concern by
policy makers that females are very poorly represented (particularly amongst very large
companies) and firms are thus missing an important pool of talent. Indeed, this has even
prompted some governments (e.g. in Norway) to impose mandatory limits for the proportion

For example, the Smith Committee report of 2003 contains recommendations that the audit committee contains
at least one member with financial expertise: It also advises: It is desirable that the committee member whom
the board considers to have recent and relevant financial experience should have a professional qualification
from one of the professional accountancy bodies.

10

of female board members, though in the UK, so far, regulatory intervention has been limited
to advice that improving board diversity (e.g. as in the 2003 Higgs Review see Adams and
Ferreira, 2009). Despite its regulatory significance, according to Nielsen and Huse, 2010),
there remains somewhat limited knowledge of the contribution of female directors to board
decision and processes. They find that women tend to contribute to board effectiveness under
certain conditions (e.g. in oversight of firm strategy), whereas over other issues (e.g.
operational control), the relationship is less marked. There is, however, growing acceptance in
the management and governance literature that gender differences may result in different
behaviour and, since boards characteristics are critical to decision making, to variation in
accounting and financial outcomes.
In general, the research into the association between gender diversity and performance
has produced mixed results (Gulamhussen and Santa, 2010). Adams and Ferreira (2009)
investigate the impact of women board members upon firm governance and they find that it is
substantial. In particular, they find that women are more active board members (they attend
more meetings and are more likely to join monitoring committees) and that female directors
appear to have a similar impact as the independent directors in governance theory do (2009:
308). Their results on performance effects are less emphatic, however. In an international
study of the banking industry, Gulamhussen and Santa (2010) find a negative association
between the presence and percentage of women on the board and various measures of
corporate risk-taking. Furthermore, a number of studies find women less likely than men to
break the law and to engage in unethical behaviour, such as earnings management (e.g. Betz
et al., 1989; Krishnan and Parsons, 2008).
To the extent that female representation improves corporate governance effectiveness
and reduces risk taking, we predict that financial reporting timeliness is improved by having
(more) female representation on the board. This is because the late filing of accounts is

11

associated with criminal proceedings and because of prior research that finds that stronger
governance improves the timeliness of loss recognition (Lara et al., 2009).
Our third measure of corporate governance measure is board size. Although it is a
commonly used board characteristic, the relationship between board size and board
effectiveness is complex. In some cases, it is argued that larger boards are less effective at
monitoring due to difficulties in coordinating board activities and directors being more likely
to free-ride than in smaller boards. In other cases, however, larger boards can be more
effective, particularly for more complex firms where advantages from the greater advisory
capacity may outweigh the costs of less effective monitoring than larger boards. In our case,
there is the additional consideration that, due to the size of our sample firms, larger boards
may involve bringing in more outsiders to the firms original owner/managers, since the
minimum number of directors is one for UK private firms. We do not therefore predict the
direction of the relationship between board size and the timeliness of financial reporting
information.
Finally, we capture the quality of corporate governance by the presence and type of
external auditor. UK companies under certain size limits are exempt from the statutory audit.
For large and small companies alike, the audit function is a crucial aspect of corporate
governance and numerous studies document that audit (and audit quality) have a positive
effect on the reliability and relevance of accounting information (e.g. Teoh and Wong, 1993).
We predict that the presence of an auditor will result in more timely information and that this
effect will be greater for big 4 auditors, where the big 4 indicator is a proxy for audit quality.
It is possible, however, that the presence of an auditor will induce further delays in filings.
Naturally, it is necessary in the empirical models to control for the large number of
additional factors that are expected to influence the timeliness of financial statements. These
include institutional factors, accounting factors and firm factors. A particularly interesting

12

variable is whether or not the firm subsequently field amended accounts. This is important as
it provides some insight into the potential trade off between accounting relevance and
reliability. It is often argued that more timely information is less reliable (e.g. Davies et al.,
1999), so an interesting question is whether companies that did file amended accounts were
more timely. Alternatively, were these companies filing less timely and less relevant
information? To address this, we include an indicator variable taking a value of one if the
company subsequently amended its accounts at Companies House.
In the case of institutional factors, we include an indicator variable taking the value of
one if the firm filed under the new regime (i.e., its accounts were drawn up for a period
beginning after April 6th 2008) and zero otherwise since the 2006 Act requires accounts to be
field within 6, rather than 7 months. We also control for the fact that under the Companies
Act, firms under certain size criteria are permitted to file abbreviated accounts (i.e., only a
balance sheet), whereas medium companies need only file and income statement without a
figure for sales. These factors could well influence the timeliness of the filings, since less
information is required to be prepared. A major consequence of this is that we are required to
draw our main variables from balance sheet data alone for most of our sample. We thus
include a dummy variable for companies with a small company exemptio n and medium
company exemption and also report results only for those companies reporting income
statement data.
It is reasonably well established that in theory and in practice, companies with bad
news to report tend to take longer to release that information (e.g. Whittred and Davies,
1980). We thus include variables for companies with negative equity, negative working
capital, negative retained earnings (and change in retained earnings though of course this
omits dividend effects), whether or not the company had a qualified audit report and a
composite credit score measure (Q-score provided on FAME for all companies). In addition,

13

where we have income statement data, we include a dummy variable indicating whether or
not the firm reported a loss before tax. We also include firm gearing (ratio of total assets to
total liabilities) as a measure of firm risk. Although riskier firms tend to report later on
average (e.g. Lee et al., 2008), it is possible that in our setting, gearing represents a measure
of the importance of outside finance and is thus associated with more timely disclosure.
We control for firm complexity by including measures of the (square root of) number
of subsidiaries and number of SIC codes and also whether the company changed its year end;
we also include a variable for whether or not the company reported a post-balance sheet
event, as this may involve more complexity in the preparation accounting reports. We include
measures of firm size (natural log of total assets) and firm age and also include industry
dummies.
Since it is possible that considerable diversity exists between firms in different
industrial sectors and that any systematic effects may not be well captured by a constant, we
also include industry-controlled reporting lag as a dependent variable in some of our models.
This is measured as the reporting lag for each firm minus the reporting lag for all firms in that
particular sector (measured by a two-digit SIC code). The variables included in our models
and definitions are reported in Table 1.
Insert Table 1 about here

3. Data, Sample and Estimation

3.1 Data sources
The April 2009 Bureau Van Dijk Financial Analysis Made Easy (FAME) DVD-ROM UK
database was the source of all the financial and non- financial data used in this study.
Financial (annual accounts data) and non-financial data (e.g., company location, auditor and
industrial classification) are available, as individual records for each company on the

14

database. The database is based on the records placed at Companies House, which is the UK
centre for accounting and company filings. Obtaining the data in a usable format required
considerable data manipulation, including the use of text recognition programmes, as many of
the variables are downloaded as unordered blocks of strings with associated dates having to
be isolated (e.g. for the accounts filing date).
Our starting point for the sample is all active UK private companies with total assets
above 500 with reporting lag data (i.e., both a filing date at Companies House and a financial
year end date) for a full period and with a year end after or during 2008. We removed
companies that had reporting dates for the year in which they were formed and also removed
data which was clearly inaccurate, particularly a small number of companies with a negative
or zero lag and companies with a lag exceeding 18 months. Further investigation revealed that
these cases were due to differences in the years for filing accounts (e.g. a company had a year
ending 31st December 2009, but Companies House had not yet recorded the filing date for
2009, so the 2008 date was included). We winsorize continuous right hand side variables at
the 1st and 99th percentile to minimise the influence of data errors. Furthermore, since the
credit score variable may include reporting lag as a component, we use the credit score from
the previous period.
This results in a total sample of 1,032,615 companies. In our analysis, however, in
addition to this full sample (for which we only have balance sheet data) we report results for
independent companies (since it is possible that subsidiaries filing times are driven by their
parents deadlines, which might be shorter) and for companies for which we have profit data.

3.2 Descriptive statistics

Descriptive statistics for the full sample of companies (n = 1,032,615) and for those
companies reporting only income statement data (n = 224,294) are presented in Table 2. For

15

the full sample, the statistics show that the average lag is 228 days, with a median of 257. Just
over 2% of the sample has a professionally qualified accountant as a board member, but
surprisingly, and in stark contrast to studies of listed companies that often report proportions
in single figures, the proportion of females on the boards of the sample companies is around
one third. It is possible that such membership is notional in that it is in order to exploit tax
advantages; nevertheless, it is an interesting statistic.
Companies in our sample have relatively small boards (median of 2 members),
reflecting the size of the firms (median total assets of only 81,000 and some 87% qualifying
as for the small exemption).
In general, companies in the subsample with profit data have a similar lag distribution
though they are considerably larger than the full sample (as expected), with a median size of
approximately 170k and a moderately larger board (75th percentile is 4 members, in contrast
to 3 for the full sample). They also have a higher propensity to employ accountants on the
board and to have a big 4 auditor, though they employ fewer women directors.

Insert Table 2 about here

3.3 Estimation procedures

Prior research into the timeliness of financial reporting information uses a number of different
measures as the dependent variable, largely due to issues of non- normality. For instance,
Leventis and Weetman (2004) use natural logarithm of reporting lag as a robustness test,
while Owusu-Ansah (2000) uses the square root transformation (which is similar in nature to
the natural logarithm transformation). In our study, the raw reporting lag has a very large
variance and positive skewness, leading to severe non-normality. To ameliorate these
problems, we use the natural log of the number of days between the year end and filing of

16

accounts (i.e., the reporting lag). We also use an industry adjusted version of the reporting lag,
which is not as prone to normality problems as it admits the possibility of negative values.
Rather than rely purely on OLS with transformed data, we assess the robustness of our
findings by employing a regression estimator designed for our type of data, namely negative
binomial regression. Poisson regression is designed for count data (i.e., data on cardinal
ordered discrete outcomes bounded at zero, but unbounded on the right, but this assumes that
the mean and variance of the distribution are equal. In our case, the data have a very large
variance and so we rely on negative binomial (NB) regression, since this is a modified version
of Poisson regression that allows for the overdispersion we face in our data (e.g. Verbeek,
2004).

4. Results
4.1 Main regression Results
Our main regression results are presented in Table 3, which includes reported models for the
full sample, for independents companies only and for those with income statement (profit)
data, based on both ordinary least squares (OLS) and negative binomial (NB) regression
estimators.
Insert Table 3 about here
The results support proposition that corporate governance factors have an important influence
on financial reporting timeliness. For the full sample based on OLS with lag and industry
controlled lag both indicate that boards with professional accounting experience file their
accounts in a more timely manner than those without (significant at the 0.01 level based on
Whites corrected standard errors). Furthermore, the negative binomial regression supports
this finding, though at a slightly lower level of significance (p < 0.05). The findings for the
proportion of women on the board is significant at the 0.01 level using both lag definitions

17

and using negative binomial regression. Interestingly, and in contrast to suggestions in prior
research that board size is often negatively related to board effectiveness, we find strong
evidence that larger boards are associated with more timely financial reporting information. 3
Finally for our main variables of interest, the presence of a non big 4 auditor is associated
with a lower reporting lag (at p < 0.01); furthermore, companies being audited by a big 4
auditor filed their accounts more quickly than their non big 4 counterparts (this difference is
significant at p <0.01 in a Wald test).
In general, these results this hold for the other two samples i.e., independent
companies and those reporting profits/income statement data. The one exception is that for the
sample of independent companies, the coefficient for the presence of an accountant on the
board is insignificant.
The estimated parameters for the additional variables in Table 3 also reveal some
interesting relationships. For instance, as expected, the change in regulation had a dramatic
effect (captured by the coefficient for NEW_REGIME). Also noteworthy is the finding that
companies that were eventually asked to restate their accounts (AMENDACC) were generally
significantly slower than other companies, suggesting that rather than there being a trade off
between relevance and reliability, some companies tend to produce unreliable and less timely
data. This result appears to be confined to smaller companies, however, since those with
income statement data show no statistical relationship. Also of note are the effects of bad
news on reporting lag. In addition to the credit score being consistently significant across all
models, there are positive coefficients on financial statement qualification (consistent with
Whittred and Davies, 1979), whether the company had negative equity (NEG_EQ), negative
retained earnings (NEG_RETEARN), negative working capital (LOW_LIQ) and gearing
(TLTA); the coefficient on change in retained earnings is, however, not significant, in contrast

We replicated this finding using untransformed board size.

18

to findings for larger companies (e.g. Leventis and Weetman, 2004). Finally, companies in the
smaller sample with profit data i.e., those with an observed value for LOSS also reported
their accounting informatio n significantly later than those reporting a profit.

4.2 Regressions for different sized companies

Since our sample contains such a wide range of size (as captured by total assets), we examine
the main models across four size quartiles, where quartile 1 contains the smallest companies
and quartile 4 the largest. The results are presented in Table 4.
Insert Table 4 about here
Although our main findings are generally robust across the 4 groups, we note that the
robustness of the ACCQUAL coefficient estimate is low. It appears that the largest companies
are most affected by the presence of an accountant on the board. The proportion of women on
the board and the size of the board are more robust and in general, having an auditor tends to
result in more timely information regardless of size (except for size quartile 3). The new
regime had a similar impact across all size groups though companies restating their accounts
are only less timely if they are not amongst the largest 25% of companies. Overall, however,
the models appear to be generally stable across all size categories and the main control
variables retain the same sign as in the overall models in Table 3.

5. Discussion and Conclusions

The timeliness of financial reporting information is an important intrinsic characteristic and
an essential element of information relevance, as recognised by the conceptual frameworks of
major standard setters over decades. In this paper, we studie the effect of corporate
governance factors on the timeliness of information of a large sample of UK private
companies. The companies we examine are often closely held, though they rely heavily on

19

outsiders for debt finance. Although it has often been assumed that lenders may use
alternative sources of information (e.g. for lending contracts), recent evidence refutes this
(e.g. Collis, 2008; Peek et al., 2009) and shows that lenders rely on published financial
statements.
In line with suggestions in the literature that corporate governance characteristics may
affect the timeliness of loss recognition, and with findings in the general corporate
governance literature on board composition, we find that companies with better financial
expertise, with larger and more diverse boards and those companies that appointed an external
auditor were associated with more timely release of financial statements to the public. We
also find that companies restating their accounts were generally later filing in the first place;
moreover, the introduction of the new Companies Act which reduced filing time by one
month (with fines for late filing), unsurprisingly, had a significant effect. In line with prior
research on the determinants of timeliness in larger listed companies, we find that bad news,
such as a qualified audit report, negative equity and reporting a loss, negatively impacts upon
timeliness.
In general, our results are robust to various subsamples and variable definitions and
also to different estimators, though some of our measures are apparently not applicable to
different sized companies. Further work will be necessary to investigate the reasons for the
changes in results across the size range.

20

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Governance and Performance Journal of Financial Economics, 94: 291-309.

Ball, R. and Shivakumar, L. (2005) Earnings Quality in UK Private Firms: Comparative Loss
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Ball, R., Robin, A. and Sadka, G. (2008) Is Financial Reporting Shaped by Equity Markets of
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Betz, M., OConnell, L. and Shephard, J.M. (1989) Gender Differences in Proclivity for
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Bromwich, M. (1992) Financial Information and Capital Markets Pitman Publishing:

London.

Collis, J. (2008) Directors Views on Accounting and Auditing Requirements for SMES
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Courtis, J.K. (1976) Relationships Between Timeliness in Corporate Reporting and

Corporate Attributes Accounting and Business Research, Winter: 45-56.

Davies, M., Paterson, R and Wilson, A. (1999) UK GAAP, Tolley: London.

Davies, B. and Whittred, G.P. (1980) The Association between Selected Corporate Attributes
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Dyer, J.C. and McHugh, A.J. (1975) The Timeliness of the Australian Annual Report
Journal of Accounting Research, Autumn: 204-219.

Feltham, G. (1974) Information Evaluation, American Accounting Association monograph.

21

Gulamhussen, M.A. and Santa, S.F. (2010) Women in Boardrooms and their Influence on
Performance and Risk Taking Harvard University Working Paper.

Hope, O-K, Thomas, W. and Vyas, D. (2010) Transparency, Ownership, and Financing
Constraints in Private Firms University of Toronto Working Paper.

Jeanjean, T. and Stolowy, H. (2009) Determinants of Board Members Financial Expertise

Empirical Evidence from France International Journal of Accounting, 44: 378-402.

Krishnan, G.V. and Parsons, L.M. (2008) Getting to the Bottom Line: An Exploration of
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Lara, J.M.G., Osam, B.G. and Penalva, F. (2009) Accounting Conservatism and Corporate
Governance Review of Accounting Studies, 14: 191-201.

Lee, H-Y., Mande, V. and Son, M. (2008) A Comparison of Reporting Lags of Multinational
and Domestic Firms Journal of international Financial Management and Accounting,
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Leventis, S. and Weetman, P. (2004) Timeliness of Financial Reporting: Applicability of

Disclosure Theories in and Emerging Capital Market Accounting and Business
Research, 34(1): 43-56.

Nielsen, S. and Huse, M. (2010) The Contribution of Women on Boards of Directors: Going
Beyond the Surface Corporate Governance: An International Review 18(2): 136-148.

Owusu-Ansah, S. (2000) Timeliness of Corporate Financial Reporting in Emerging Capital

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Business Research, 30(3): 241-254.

Peek, E., Cuijpers, R. and Buijink, W. (2010) Creditors and Shareholders Reporting
Demands in Public versus Private Firms: Evidence from Europe Contemporary
Accounting Research, Spring: 49-91.

22

RIA (2007) Companies Act 2007: Regulatory Impact Assessment, HMSO, London

Suphap, W. (2004) Getting it Right versus Getting it Quick: The Quality-Timeliness

Tradeoff in Corporate Disclosure Columbia Business Law Review, 661-689.

Verbeek, M. (2004) A Guide to Modern Econometrics, John Wiley & Sons: Chichester.

Whittred, G.P. (1980) Audit Qualification and the Timeliness of Corporate Annual Reports,
The Accounting Review, 55(4): 563-577.

Whittred, G.P. and Zimmer, I. (1984) Timeliness of Financial Reporting and Financial
Distress The Accounting Review, 59: 287-295.

23

Table 1
Variable Definitions and Expected Relationship with Timeliness
Variable Definition

Label

Number of days between account year end and date accounts filed at Companies
House
LAG adjusted by median of lag for firms with the same 2 digit SIC code
1 if there is a qualified accountant on the board, 0 otherwise
Proportion of female directors on the board
Natural log of number of directors
1 if company is audited by a big 4 auditor, 0 otherwise
1 if company is audited by a non big 4 auditor, 0 otherwise
1 if company filed amended accounts, 0 otherwise
1 if company had qualified audit report, 0 otherwise
1 if company had negative working capital, 0 otherwise
1 if company had negative equity, 0 otherwise
Previous years credit score (0-100; 100 is least risky)
1 if company disclosed post-balance sheet event, 0 otherwise
Natural log of total assets
Company age in years
1 if company filed accounts under small company exemption, 0 otherwise
1 if company filed accounts under medium company exemption, 0 otherwise
1 if accounts are filed under new April 2008 reporting regime, 0 otherwise
Total liabilities to total assets
Square root of the number of subsidiaries
Number of additional industrial SIC codes (0 indicating no additional SIC code)
1 if company changed its accounting year end, 0 otherwise
1 if company had negative retained earnings, 0 otherwise
Change in retained earnings scaled by current year total assets
1 if the company is independent (not held as a subsidiary), 0 otherwise
1 if the company had negative PBT, 0 otherwise
1 if company is in agriculture sector, 0 otherwise
1 if company is in mining sector, 0 otherwise
1 if company is in manufacturing sector, 0 otherwise
1 if company is in construction sector, 0 otherwise
1 if company is in utilities sector, 0 otherwise
1 if company is in retail/wholesale sector, 0 otherwise
1 if company is in the service sector, 0 otherwise
1 if company is in financial sector, 0 otherwise

24

Expected
Sign

LAG

N/A

IALAG

N/A
?
+
+
+
+
+
?
?
+
+
?
+
?
?
?
?
?
?
?
?
?
?

ACCQUAL
PROP_FEMS
LNBRDSIZE
BIG4
NONBIG4
AMENACC
QUALIF
NEGWC
NEGEQ
QSCORE
POST_BAL
LNTA
AGE
SM_EXEMP
MED_CO
NEW_REGIME
TLTA
SQRSUBS
N_SIC
YE_CHANGE
NEG_RETEARN
CH_RETEARN
INDEP
LOSS
AGRIC
MINING
MANUF
CONSTR
UTIL
RETAIL
SERVICE
FINANCE

Table 2
Descriptive Statistics
Full Sample
Variable
LAG
IA LAG
ACCQUAL
PROP FEMS
LNBRDSIZE
BRD SIZE
BIG4
NONBIG4
AMENACC

QUALIF
POST BAL
TA
LNTA
SM EXEMP
MED CO
NEW REGIME
AGE
QSCORE
NEGWC
NEGEQ
NEG RETEARN
CH RETEARN
TLTA
SQRSUBS
SUBS
N SIC
YE CHANGE
LOSS
INDEP

(N = 1,032,615)
Mean
SD
P25
Median
228.2
87.50
162
257
-28.89
87.29
-95
-1
0.0216
0.145
0
0
0.324
0.285
0
0.333
0.970
0.396
0.693
1.099
2.867
1.377
2
3
0.0394
0.195
0
0
0.549
0.498
0
1
0.00550
0.0737
0
0
0.00870
0.0927
0
0
0.0110
0.104
0
0
1.303e+07 9.164e+08
20380
81080
11.50
2.275
9.922
11.30
0.869
0.338
1
1
0.00710
0.0842
0
0
0.263
0.440
0
0
11.82
12.80
4
7
42.38
19.44
30
41
0.395
0.489
0
0
0.207
0.405
0
0
0.246
0.431
0
0
-0.126
0.659
-0.117
0.000200
1.056
1.798
0.399
0.743
0.116
0.456
0
0
0.221
2.444
0
0
0.135
0.438
0
0
0.0193
0.138
0
0
-

P75
297
36
0
0.500
1.099
3
0
1
0
0
0
397500
12.89
1
0
1
13
50
1
0
0
0.0837
0.987
0
0
0
0
-

Sample Reporting Profit Before Tax

(N = 224,294)
Mean
SD
P25
229.7
88.58
164
-26.30
88.21
-92
0.0455
0.208
0
0.259
0.274
0
1.125
0.462
0.693
3.453
1.939
2
0.170
0.376
0
0.633
0.482
0
0.00570
0.0751
0
0.0270
0.162
0
0.0400
0.196
0
5.787e+07 1.965e+09
23990
12.49
3.095
10.09
0.602
0.490
0
0.0325
0.177
0
0.214
0.410
0
14.75
15.79
5
52.49
27.03
31
0.350
0.477
0
0.211
0.408
0
0.280
0.449
0
-0.135
0.707
-0.0995
1.083
2.001
0.341
0.294
0.779
0
0.693
4.973
0
0.188
0.547
0
0.0244
0.154
0
0.316
0.465
0

Median
254
-3
0
0.200
1.099
3
0
1
0
0
0
166900
12.03
1
0
0
9
50
0
0
0
0.00260
0.701
0
0
0
0
0

P75
297
37
0
0.500
1.386
4
0
1
0
0
0
2.954e+06
14.90
1
0
0
19
77
1
0
1
0.0787
0.983
0
0
0
0
1

Table 3
Multivariate Regression Results
Dep. variable
Sample
Estimator
ACCQUAL
PROP_FEMS
LNBRDSIZE
BIG4
NONBIG4
AMENA CC
QUALIF
POST_BAL
LNTA
SM_EXEMP
MED_CO
NEW_REGIME
AGE
QSCORE
NEGWC
NEGEQ

LNLAG
FULL
OLS

IALAG
FULL
OLS

LAG
FULL
COUNTREG

LNLAG
INDEP
OLS

LAG
INDEP
COUNTREG

LNLAG
IS DATA
OLS

IALAG
IS DATA
OLS

LAG
IS DATA
COUNTREG

-0.0189
(5.31)***
-0.0525
(30.03)***
-0.0422
(31.11)***
-0.1243
(45.21)***
-0.0766
(72.53)***
0.0438
(6.42)***
0.1122
(28.49)***
0.0837
(23.05)***
0.0182
(59.33)***
-0.0608
(24.38)***
0.0359
(7.76)***
-0.3798
(306.29)***
0.0005
(10.85)***
-0.0013
(30.55)***
0.0385
(33.56)***
0.0495
(19.44)***

-2.3077
(4.18)***
-10.6752
(37.22)***
-6.2834
(27.79)***
-21.0890
(40.18)***
-14.7331
(86.21)***
13.0502
(11.91)***
27.8029
(32.58)***
18.7841
(24.89)***
1.7737
(35.26)***
-12.5044
(29.28)***
7.8898
(8.81)***
-67.6674
(381.06)***
0.1383
(18.12)***
-0.2856
(38.59)***
4.7977
(25.13)***
8.2747
(18.72)***

-0.0048
(1.97)**
-0.0440
(33.98)***
-0.0409
(39.88)***
-0.1039
(45.85)***
-0.0691
(88.81)***
0.0520
(11.46)***
0.1045
(32.75)***
0.0748
(24.97)***
0.0121
(53.23)***
-0.0573
(30.58)***
0.0295
(7.74)***
-0.3248
(346.83)***
0.0004
(12.51)***
-0.0013
(42.23)***
0.0288
(33.47)***
0.0354
(18.70)***

-0.0204
(4.14)***
-0.0536
(29.09)***
-0.0416
(27.61)***
-0.0988
(13.69)***
-0.0772
(71.22)***
0.0558
(7.78)***
0.0947
(13.25)***
0.0810
(13.05)***
0.0208
(59.91)***
-0.0620
(19.75)***
0.0360
(6.12)***
-0.3807
(289.72)***
0.0005
(9.83)***
-0.0015
(29.01)***
0.0401
(32.41)***
0.0407
(13.17)***

0.0029
(0.91)
-0.0447
(32.80)***
-0.0397
(35.26)***
-0.0793
(13.19)***
-0.0696
(87.14)***
0.0605
(12.83)***
0.0896
(15.95)***
0.0659
(13.29)***
0.0136
(54.11)***
-0.0607
(26.09)***
0.0293
(6.04)***
-0.3247
(328.61)***
0.0005
(11.89)***
-0.0015
(40.52)***
0.0301
(32.66)***
0.0285
(12.79)***

-0.0243
(5.17)***
-0.0324
(7.82)***
-0.0556
(20.89)***
-0.0721
(16.72)***
-0.0565
(18.09)***
-0.0279
(1.76)*
0.1311
(27.91)***
0.0843
(20.50)***
0.0155
(26.78)***
-0.0393
(9.05)***
0.0426
(8.66)***
-0.4053
(137.54)***
0.0001
(2.12)**
-0.0005
(7.04)***
0.0357
(14.11)***
0.0501
(11.51)***

-6.3019
(7.66)***
-7.0541
(10.33)***
-8.0559
(17.66)***
-11.0472
(14.50)***
-10.5882
(21.74)***
-0.7930
(0.31)
32.4927
(30.71)***
19.9565
(22.62)***
1.0837
(10.93)***
-2.9793
(3.89)***
9.3526
(9.86)***
-71.2449
(173.56)***
0.0591
(4.69)***
-0.0459
(3.83)***
4.0065
(9.26)***
9.1698
(11.58)***

-0.0197
(5.34)***
-0.0277
(9.01)***
-0.0566
(27.39)***
-0.0621
(18.60)***
-0.0537
(24.49)***
-0.0044
(0.41)
0.1212
(30.78)***
0.0763
(21.98)***
0.0108
(24.27)***
-0.0218
(6.40)***
0.0350
(8.55)***
-0.3470
(154.96)***
0.0001
(1.15)
-0.0005
(9.74)***
0.0274
(14.26)***
0.0416
(12.27)***

NEG_RETEARN
CH_RETEARN
TLTA
SQRSUBS
N_SIC
YE_CHANGE
INDEP
LOSS

0.0423
(18.23)***
-0.0018
(1.99)**
0.0064
(18.46)***
0.0079
(7.65)***
0.0175
(16.83)***
-0.0913
(23.17)***
-0.0065
(3.65)***
-

8.4620
(21.11)***
-0.4365
(3.07)***
0.7319
(13.08)***
1.6067
(8.29)***
2.7022
(15.07)***
-11.3912
(18.41)***
-0.0687
(0.21)
-

0.0378
(21.73)***
-0.0020
(3.15)***
0.0045
(18.87)***
0.0075
(8.92)***
0.0146
(18.40)***
-0.0616
(21.04)***
-0.0026
(1.90)*
-

0.0564
(19.76)***
-0.0009
(0.91)
0.0079
(20.21)***
0.0194
(13.48)***
0.0200
(16.72)***
-0.1285
(27.37)***
-

0.0482
(23.29)***
-0.0011
(1.58)
0.0057
(21.46)***
0.0159
(14.29)***
0.0165
(18.50)***
-0.0933
(26.81)***
-

Constant

-0.0015
(0.38)
0.0070
(3.66)***
0.0072
(10.46)***
0.0009
(0.70)
0.0124
(7.04)***
-0.0383
(5.20)***
0.0032
(1.05)
0.0548
(21.39)***
5.1997
(247.98)***

0.1032
(0.15)
1.2051
(3.95)***
0.8643
(7.65)***
0.6318
(2.47)**
2.2168
(7.06)***
-0.6893
(0.57)
1.7942
(3.16)***
10.9721
(25.08)***
-12.8708
(7.59)***

5.2978
0.9787
5.4578
5.2946
5.4693
(381.23)***
(1.12)
(500.16)***
(281.20)***
(386.17)***
Industry dummies
Yes
N/A
Yes
Yes
Yes
Yes
N/A
Observations
1032615
1032615
1032615
909324
909324
224294
224294
R-squared
0.1339
0.1503
0.1329
0.1375
0.1413
F-value
4633.46
8585.95
4223.59
967.40
1678.88
chi-2
169025.23
150507.22
Robust t statistics in parentheses for OLS (ordinary least squares) regression; robust z statistics in parentheses for count (negative binomial) regression.
* significant at 10%; ** significant at 5%; *** significant at 1%
Variable definitions are provided in Table 1

-0.0007
(0.22)
0.0040
(2.97)***
0.0052
(10.78)***
0.0022
(1.94)*
0.0112
(8.14)***
-0.0110
(2.05)**
0.0033
(1.33)
0.0438
(22.74)***
5.3561
(311.89)***

Yes
224294

35106.49

Table 4
Count Regressions Results by Size Quartiles
Size Quartile 1
ACCQUAL

Size Quartile 2

Size Quartile 3

Size Quartile 4

0.0045
-0.0003
0.0097
-0.0091
(0.67)
(0.05)
(1.79)*
(2.72)***
PROP_FEMS
-0.0492
-0.0558
-0.0461
-0.0376
(18.25)***
(21.41)***
(18.57)***
(14.80)***
LNBRDSIZE
-0.0230
-0.0305
-0.0405
-0.0634
(10.10)***
(13.58)***
(19.44)***
(36.17)***
BIG4
-0.0501
-0.0472
-0.0082
-0.0643
(4.04)***
(4.06)***
(1.16)
(22.98)***
NONBIG4
-0.0735
-0.0738
-0.0670
-0.0386
(46.11)***
(49.57)***
(46.92)***
(23.52)***
AMENACC
0.0744
0.0798
0.0670
-0.0036
(7.37)***
(8.82)***
(7.99)***
(0.41)
QUALIF
0.1504
0.0447
0.0783
0.1224
(8.25)***
(2.73)***
(7.29)***
(35.82)***
POST_BAL
0.0658
0.0701
0.1333
0.0747
(3.32)***
(4.61)***
(17.52)***
(22.10)***
LNTA
0.0063
0.0164
0.0133
0.0143
(6.20)***
(8.57)***
(8.60)***
(23.37)***
NEW_REGIME
-0.3332
-0.3292
-0.3266
-0.3118
(162.77)***
(173.62)***
(181.04)***
(178.06)***
AGE
0.0003
0.0016
0.0008
-0.0002
(2.76)***
(14.92)***
(11.03)***
(5.48)***
QSCORE
-0.0009
-0.0013
-0.0014
-0.0005
(13.19)***
(18.80)***
(23.92)***
(11.72)***
NEGWC
0.0283
0.0370
0.0310
0.0177
(13.11)***
(20.60)***
(18.75)***
(11.82)***
NEGEQ
0.0220
0.0332
0.0307
0.0380
(4.36)***
(6.51)***
(7.46)***
(13.27)***
NEG_RETEARN
0.0397
0.0447
0.0400
0.0346
(8.40)***
(9.32)***
(10.58)***
(14.27)***
CH_RETEARN
-0.0002
-0.0024
-0.0093
-0.0147
(0.28)
(1.55)
(4.42)***
(5.76)***
TLTA
0.0041
0.0070
0.0114
0.0122
(13.37)***
(10.65)***
(12.44)***
(10.60)***
SQRSUBS
0.0346
0.0329
0.0203
0.0088
(7.16)***
(8.30)***
(7.94)***
(9.12)***
N_SIC
0.0293
0.0250
0.0183
0.0047
(14.63)***
(12.89)***
(10.72)***
(4.09)***
YE_CHANGE
-0.1496
-0.1006
-0.0523
0.0089
(20.83)***
(14.69)***
(8.75)***
(2.04)**
Constant
5.4501
5.3591
5.4380
5.3066
(193.20)***
(172.61)***
(183.25)***
(324.31)***
Observations
229736
253930
268992
279957
chi2
36512.30
43000.92
45816.84
46791.24
The dependent variable is reporting lag (in days).
Table contains negative binomial regressions by size quartiles, where quartile 1 contains the smallest companies
and quartile 4 the largest.
Robust z statistics in parentheses
* significant at 10%; ** significant at 5%; *** significant at 1%
Industry dummy variables are included in all regressions.