9 This study is expected to provide the information in drafting the
law of timeliness submission of financial report for public companies in Indonesia.
b. For Practitioners and Auditors
This study is expected to be useful and helpful in identifying factors that affect the time delay submission of financial
statements and to provide an overview of the importance of timeliness in delivering the companys financial position to the
public. c.
For Audit Services User The study is expected to improve the efficiency and effectiveness
of the audit process by controlling the factor that cause delays in submission of financial report.
d. For Future Research
The results of this research can give contribution and information regarding the factors that influence the delay of the submission of
financial report, as well as a basis or reference for future studies. e.
For Researcher Provide a better understanding especially about factors that
influence the delay submission of financial statements in Indonesia, increasing insight, and can compare the existing
application in the theory of acquired companies during the lecture.
10
CHAPTER II LITERATURE REVIEW
A. Theoretical Framework
1. Agency Theory
An agency relationship is one, which the principals engage to another person the agent performing some service on their behalf,
which involves delegating some decision-making authority to the agent Delves and Patrick 2008. Mitnick 1973 highlighted that the most
recognizable form of agency relationship is that of employer and employee. Other examples include state principal and ambassador
agent; constituents principal and elected representative agent; organization principal and lobbyist agent;
or shareholders principal and CEO. They give further explanation that agency theory
is the study of the agency relationship. Jensen and Meckling 1976 provided a meaningful definition
regarding agency theory. They indicate agency theory as a theory that explains the relationship between agents as those who manage the
company and the principal as the owner; both are bound in a contract. The owner as the principals having little knowledge of the business
will transfer the decision concerning organization operation to the agents, which used to be represented by the managers. The principals
evaluate the information received from the management while the agents are running as part of management activities and decision-
11 making.
The separation of ownership and control has led to notorious agency problem. The agency problem was first explored in Ross
1973, with the first detail theoretical exposition of agency theory presented in Jensen and Meckling 1976.
Delves and Patrick 2008 argued that the issue arises from particularly dilemma when the principal and agent while nominally
working toward the same goal may not always share the same interests. While Brennan 1995 explained that the agency problems
happen due to the impossibility of perfectly contracting for every possible action of an agent whose decisions can affect both his own
welfare and the principal welfare. The problem is arising, how to induce the agent to act for the best interests of the principal. Managers
bear the entire cost of failing to pursue their own goals, but capture only a fraction of the benefits. Jensen and Meckling 1976 argue that
this inefficiency is reduced as managerial incentives to take value- maximizing decisions are increased.
2. Compliance Theory
According to the General Dictionary Indonesian compliance comes from the word obey. Obey means love, obedience to orders or rules
and discipline. Compliance means to be submissive, obedient, and obedient to the teachings or rules.
Compliance Theory has been studied in the social sciences,
