1、 This study is designed to investigate the effects of sector, reporting type, and income on firms timely annual financial reporting practices listed on Istanbul Stock Exchange （ISE）. Regression model is utilized to examine the effects of sector （financial firms）,financial statement type （consolidate
2、d-non-consolidated firms）, and income （positive-negative income） for the years from 2005 to 2008. The results reveal that sector, financial statement type and income have significant impact on timely reporting financial statements of selected firms. The coefficient estimates for sector, financial st
3、atement type, and income are statistically significant. Effects of sector and financial statement type on lead time are positive while incomes is negative. Based on the results,non financial firms publish their financial statements later than others. Similarly,consolidated firms report their financi
4、al statements later than non-consolidated firms.Finally, firms that report positive income release financial statements earlier than others.Keywords: Timeliness, Reporting Financial Statements, Quality of Financial Information,Lead Time, Timely ReportingJEL Classification Codes: 1. Introduction In t
5、his study, we investigate the effects of sector （financial-non-financial firms）, financial statement type （consolidated-non-consolidated financial statements）, and income （positive-negative income） on timely reporting practices of companies listed on Istanbul Stock Exchange （ISE _stanbul Menkul Kyme
6、tler Borsas, IMKB）. The sector is defined as financial firms and non-financial firms that are listed on ISE. Financial statement type term is used for firms that report their financial statement as consolidated and non-consolidated. Finally, income is considered as firms that report positive income
7、and negative income. The results of our analysis indicate that those variables have significant impacts on timelines of financial statements. Financial statements and mandatory financial reporting are prominent sources of information for financial statement users in decision making. Financial statem
8、ents must have certain attributes to be useful: understandable, reliable, relevant, and comparable. Quality of data that financial statements provide is usually checked in accordance with those attributes of statements. High-quality information is essential to the proper functioning of equity market
9、s, financial markets, and financial decisions （Shaw, 2003）. In order to be functional, financial information gathered out of financial statements must be useful to its users. The usefulness of accounting information to financial statement users is an important criterion of quality of earnings. Finan
10、cial data that are not providing useful information to users are not valuable. As a matter of fact, The Financial Accounting Standards Board （FASB） outlines the components of quality information: predictive value, feedback value, timeliness, verifiability,neutrality, and representational faithfulnes
11、s （Velury and Jenkins, 2006）. Timeliness is one of the most important components of relevancy. Both timeliness and relevance are important features of useful information. Therefore, financial statements should be published on time to be useful to its users in their decision making. The concept of ti
12、meliness in financial reporting has two dimensions: the frequency of financial reporting and the lag between the end of the reporting period and the date the financial statements are issued （Davies ,1980）. Timely corporate financial reporting is an important qualitative attribute and a necessary com
13、ponent of financial accounting. Financial information needs to be available to its users as rapidly as possible to make corporate financial statement information relevant decision making process. Timely reporting on financial statements is necessary for healthy financial markets. Timely financial re
14、porting helps in efficient and timely allocation of resources by reducing dissemination of asymmetric information, by improving pricing of securities, and by mitigating insider trading, leaks and rumors in the market （Kamran, 2003）. Many studies have discussed various aspects of corporate governance
15、. In the area of timeliness of financial reporting, for example, the Accounting Principles Board （1970） recognized the general principle several decades ago. The Financial Accounting Standards Board （1980） recognized the importance of timeliness in one of its Concepts Statements （McGee, 2009,）. Time
16、liness is a necessary component of relevant financial information that is receiving increased attention by accounting regulators and listing authorities worldwide. For example, in the United States （U.S.） the Securities and Exchange Commission （SEC）, New York Stock Exchange（NYSE）, and NASDAQ have is
17、sued requirements and recommendations regarding the timely dissemination of financial information （Abdelsalam and Street, 2007,）. Timeliness of financial statements is being discussed in the OECD Principles of Corporate Governance1. Discloser and transparency are explained as follows: “The corporate
18、 governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company. Disclosure should include, but not be limited to, material information on:The f
19、inancial and operating results of the company. Information should be prepared and disclosed in accordance with high quality standards of accounting and financial and non-financial disclosure” （OECD, 2004,p.22）. Timely reporting on financial statements is affected by many factors. The regulations, ac
20、counting standards, and sector and firm-specifics are some of those. While there may be many factors, company-specific and audit-related ones have been examined in prior studies as being particularly important. Company-specific factors are those that enable management of a firm either to produce mor
21、e timely financial statements or to reduce costs of delaying in reporting. Such factors include company size, profitability, gearing, financial condition, industry type and ownership structure（Ansah and Leventis, 2006）. In this study, we explore the effects of sector, financial statement type,and in
22、come on timely reporting.1.1. The Regulatory Framework for Timely Reporting in Turkey For listed companies two legal sources govern timely reporting: Turkish Commercial Code and Law of Capital Market. In addition to those sources, Turkish Accounting Standards Board is publishing accounting standards
23、 including timeliness in financial reporting. The Turkish Commercial Code requires annual reports to be prepared at least 15 days before the date of the annual general meeting. In addition, Capital Market Board （CMB） of Turkey published several communiqus related to financial reporting process betwe
24、en 1989 and 2003. In 2003, the Board issued a broad set of financial reporting standards that are translation of International Accounting Standards （IAS） and International Financial Reporting Standards （IFRS）. Currently, TurkishAccounting Standards Board （TASB） is the only organization that publishe
25、s accounting standards.According to regulations that enacted in 2003, companies that are listed on the stock exchange must publish their audited annual financial statements by the 10th week after their financial year-end.However, consolidated financial statements must be published within 14 weeks of
26、 the financial year end（Trel, 2010）.2. Review of the Literature A number of studies have discussed the aspects and components of timeliness in financial reporting.Actually, most of those studies examine what effects timely reporting of financial statements. The literature contains studies that are d
27、iscussing international differences on timely reporting of financial statements as well. Many works state mixed conclusions regarding the relationship of timeliness of reporting and the quality of the information being reported. Some studies show that good news is reported before bad news, whereas o
28、ther studies show that bad news is reported before good news. Some researchers found that many companies are not willing to report bad news and because of that companies take more time to calculate the numbers or apply creative accounting techniques when they need to report bad news.On the other han
29、d, some studies found that bad news are reported before good news because the market would not focus enough on good news （McGee, 2009）. Basu （1997） states that reporting bad news sooner could be just because of conservatism and reported earnings respond more completely or quickly to bad news than go
30、od news. However,sometimes because of less incentive in tax system, conservatism is not an important variable in reporting bad news or good news sooner （Jindrichovska and Mcleay, 2005）. When financial statements are released earlier than expected, they tend to have larger price effects than when the
31、y are released on time or later than expected. Further,unexpectedly early reports are characterized by good news, whereas unexpectedly late reports tend to bear bad news （Chambers & Penman, 1984）. Kross and Schroeder （1984） conclude that abnormal returns of companies that are announced early （late）
32、were significantly higher （lower） than the returns of firms that are announced late （early）. And their results are consistent with previous studies. The relationship between company size and timeliness of financial reports is another aspect being discussed by researchers. Aroly（1989） state that large firms report earnings relatively early, but the associated market reaction tends to be small due to the size effect. On the other hand,small size firms release later, but their associated market reaction tends to be high due to the
