This study investigates the relationship between the involvement of component auditors in multinational group audits and management’s decision regarding the time to disclose earnings announcements. By examining the sample of U.S. multinational corporations for the period from 2017 to 2023, we find that the use of component auditors relates positively to earnings announcement lag. Furthermore, our empirical observations confirm that the proportion of audit hours conducted by component auditors increases the likelihood of firms announcing earnings after the audit report date. We further find that using affiliated component auditors increases the delay of earnings announcement as well as enhances managers' motivation to release earnings announcement after the audit report date. The research findings are consistent through a range of robustness tests. The outcomes of this investigation are anticipated to augment the growing literature on multinational group audits by enhancing our understanding of how the involvement of component auditors may affect the timeliness of earnings. This study aims to improve regulators’ understanding of how multinational group audits relate to the stock market and what regulatory changes can be made to solve the deficiencies of multinational group audits.
Keywords: Earnings announcements; Earnings announcements timeliness; Multinational group audits; Component auditors; Form AP.