Ethnic diversity and its effect on audit lag

Abstract

This study investigates the effects of chief executive officer (CEO) ethnicity, audit committee ethnic diversity, audit tenure, and accounting financial expertise on audit delay in consumer non-cyclical (CNC) companies listed on the Indonesia Stock Exchange (IDX). Drawing upon the resource-based view (Barney, 1991) and expanding the demographic frameworks of prior literature (Harjoto et al., 2015), this research employs a quantitative methodology using panel data regression with a fixed-effect model (FEM) on 73 firms during the 2022–2023 period (146 firm-year observations). The empirical results reveal that CEO ethnicity, audit committee ethnic diversity, and accounting financial expertise are significantly and negatively associated with audit delay, effectively minimizing financial reporting lag. Conversely, audit tenure exerts a significant positive influence on audit delay, suggesting that prolonged auditor-client relationships may compromise independence and slow reporting. These findings offer critical practical insights for companies, regulators, and investors aiming to strengthen internal corporate governance mechanisms and optimize financial reporting efficiency in emerging markets. Future studies can extend this single-sector scope by investigating broader governance determinants across diverse industries.