Property and real estate companies experiencing financial distress tend to delay the submission of their financial statements, but strong corporate governance has been proven to mitigate this delay, according to research from the Universitas Pendidikan Ganesha published in 2026. A research team consisting of Anak Agung Putu Gede Bagus Arie Susandya, Anantawikrama Tungga Atmadja, I Made Pradana Adiputra, Desak Nyoman Sri Werastuti, and Putu Sukma Kurniawan analyzed 216 data points from property companies listed on the Indonesia Stock Exchange for the 2022–2024 period to uncover the relationship between financial distress, governance, and reporting timeliness.
Industry Background and Challenges
Timely financial reporting is a crucial instrument for investors and creditors to make informed decisions. However, the property sector faces unique challenges, such as long project cycles, reliance on external financing, and the complexity of asset valuation. When companies in this sector experience financial distress—characterized by declining profitability or liquidity issues—the audit process becomes more complicated. Auditors require extra time to perform in-depth verification, particularly regarding property valuation and going concern assumptions, which ultimately triggers reporting delays.
Research Methodology
This study employed a quantitative approach using moderated regression analysis. Financial distress was measured using the modified Altman Z-Score, while the quality of governance was assessed through the Corporate Governance Index, which refers to the dimensions of the ASEAN Corporate Governance Scorecard. Audit report lag—the number of days from the books' closing date to the independent auditor's report date—was used as a proxy to measure reporting delays.
Key Findings
The analysis results indicate that financial distress has a significant positive impact on financial reporting delays. Conversely, good corporate governance has a significant negative impact on delays, meaning that the stronger the governance, the faster the reports are issued. The most crucial finding is the role of governance as a buffer: strong corporate governance was proven to significantly weaken the negative effect of financial distress on the duration of reporting delays.
Implications and Benefits
These findings confirm that corporate governance is not merely an administrative requirement but an essential operational mechanism. For company management, strengthening internal supervision and transparency is a key strategy to maintain the credibility of financial statements, especially when the company is in a distressed condition. For regulators, these results emphasize the importance of encouraging the implementation of substantive governance at the company level to ensure the market receives timely information, which in turn reduces uncertainty for stakeholders.
Author Profile:
Anak Agung Putu Gede Bagus Arie Susandya is an academic from Universitas Pendidikan Ganesha with expertise in accounting, auditing, and corporate governance.
Research Source:
Susandya, A. A. P. G. B. A., Atmadja, A. T., Adiputra, I. M. P., Werastuti, D. N. S., & Kurniawan, P. S. (2026). "Does Financial Distress Delay Financial Reporting? The Moderating Role of Corporate Governance in Property and Real Estate Firms". Indonesian Journal of Business Analytics (IJBA), 6(3), 629-648. DOI:
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