Audit Quality and Value Relevance of Listed Deposit Money Banks’ Financial Report in Nigeria

Abstract

This study examined the effect of audit quality on value relevance of commercial banks’ financial report in Nigeria. The study employed ex post facto research design. Data for analysis was gotten from the published financial reports of 13 listed commercial banks spanning a period of 5 years (2017 to 2021). The Ordinary Least Square (OLS) method using multiple regression model was used to analyze the data generated with the aid of Statistical Package for the Social Sciences (SPSS Version 20). Findings from the study revealed that Audit fee has a positive significant effect on value relevance of reported earnings per share of the listed commercial banks in Nigeria. Further findings revealed that Audit firm size has a positive insignificant effect on value relevance of reported earnings per share of the listed commercial banks in Nigeria and finally, it was revealed that Audit tenure has a positive insignificant effect on value relevance of reported earnings per share of the listed commercial banks in Nigeria. Based on the findings the study recommends that, commercial banks should endevour to balance the costs of audit by paying prudent fee for audit services such that it will not impede or influence the external auditors judgement on the reported financial figures in order to minimize the risk of reduced independence. Such practices if not considered that lead to audit risk of poor judgement that might distort the value relevance of financial reports of the banks thus; lead to a situation where investors base there judgement on reported earnings figures that are inappropriate.Also, commercial banks should not maintain the services of a particular audit firm over a long period of time as this impedes the quality of audit service offered as a result of the familiarity is developed between the audit firm and client overtime. Keywords: Audit Quality, Audit Size, Audit Fee, Audit Tenure, Value Relevance and Deposit Money Banks.