I don't know of an official guidance, but what has worked well for me is to do a bit of research on the fleet's traditional spread between 1st and last place. That has often turned out to be someplace between 5 and 10 percent of the finishing time of the first boat. I then set the time limit generously based on that information. 

One can't set a single number as races can last from 30min to 3hours or more, even for the leader.

I believe the appropriate scoring is DNF rather than DSQ. We use 45 minutes with a PHRF rating spread of 80ish points. This is inland lake evening racing, with most frequently diminishing breeze over the course of the race.

At Grapevine Sailing Club we have a big range of PHRF boats, fleeted as best we can but with still big ratings spreads.  Here is the part of our SIs dealing with the issue:

Time Limits
a. The first warning signal of the day must occur no later than 1.5 hours after the scheduled first
2026 Frostbite Series warning or all races for that day shall be abandoned (no more racing this day).
b. A race (for a fleet) shall be abandoned when no boat in that fleet completes the leg to the first
mark within 1 hour. A race (for a fleet) shall be abandoned when the first boat in that fleet fails to
finish within 3 hours after the start signal for that fleet.
c. Any boat in a race, failing to finish within 45 min after the first boat in her fleet has finished, shall be scored DNF without a hearing. This changes RRS 35, A5.1 and A5.2.

At our club, we vary the times depending on the distance of the race, roughly 5, 12, and 20 miles. Here is the breakdown found in our SI's.

  TIME LIMITS

 12.1 Standard Race: Boats failing to finish within 40 minutes after the first boat in their division has finished will be scored Did Not Finish. This changes rules 35 and A4. If no boat has finished within 150 minutes the race will be abandoned.

 12.2 Race involving Entrance Island or its Navigational Marks: Boats failing to finish within 75 minutes after the first boat in their division has finished will be scored Did Not Finish. This changes rules 35 and A4. If no boat has finished within 300 minutes the race will be abandoned.

 12.3 Race involving Maude Island/Halibut Bank: Boats failing to finish within 105 minutes after the first boat in their division has finished will be scored Did Not Finish. This changes rules 35 and A4. If no boat has finished within 420 minutes the race will be abandoned.

 12.4 If the first boat to finish sails the course in less than 30 minutes the race will not be counted.   

OK .. let's put some meat on these bones ..

Let's say the SI's state the TL is 30min after the first finisher.  Let's examine 3 boats in a very large fleet.  It's a 20nm race.

Lightning has a PHRF rating of 60
Speedy has a PHRF rating of 120
Droopy has a PHRF rating of 180

Lightning crosses first.
Speedy +25min
Droopy +39min

Lightning is awarded 1st and Speedy is awarded 2nd place, but Droopy would have corrected over both Lightning and Speedy had she not been TLE'd from the SI's.

Question: Given the large PHRF-spread in the fleet and the length of the course, can it be an improper action by the RC to set too tight of a TL?

I grew up sailing on the Chesapeake Bay in the 70's.  Either the RC shortened the course, abandoned the race before anyone finished, or waited for the last boat to finish.  I suspect now the people on the RC have other priorities.

Some discussion here about this issue, but consensus has been to use "TLE," or time limit expired, if a boat finishes X minutes after the first boat finishes and score the boat 1 point more than the number of boats that finished within the time limit. When this kicks in, a competitor is a) relieved that they don't need to keep racing in the last gasp of air, or b) exasperated because they'd spent all that time racing with little reward.

As PRO, my goal has been to see that this never happens because I've shortened course or abandoned the race first!

This is where the skill and knowledge of the person writing the SI's comes in - assisted by the RC on the water.  A few of my random thoughts.
1. Setting a time limit that requires the slowest boat to have a corrected time way faster than the corrected time of the fastest boat to avoid TLE is inherently unfair. The SIs need to take into account the difference in speed of the fastest (first finisher?) and slowest boats in a fleet and set the time limit to allow the slowest boat to at least place before TLE.
2. The RC needs to monitor the progress of the fleet and be prepared to either shorten course or abandon if it looks like the race is running too long to allow the slowest boats with a chance of placing to avoid TLE.
3. Being a dinghy club, we run multiple races in a day and try to avoid races taking too long by setting time limits then shortening course when necessary. We also often use T/T corrected lap times instead of corrected race times to allow both the cats (circa PY 650) and the slowest monohulls (circa PY1500) to have decent length races without having to wait for the slow boats to do the same number of laps as the fast cats.  That works for "round the cans" races, but obviously more of a challenge for the big boys distance races.
4. Detailed planning ahead saves a lot of anguish and frustration!
5.  If all else fails  -  use a pursuit race format.... :o) 

I typically use time to the first mark (20 minutes for around the bouts. Then total time limit or a finish window ( how long after the first boat finishes. The exact time should be how long a typical race is in your lighter conditions and the finish window depends on the differences of the PHRF ratings. I like TLE and in a series which   one more than the number of finishers. DNS is one more than the boats in the series.  Gives recognition to those that came to the starting line even if they did not finish.