EFFECT OF AUDIT COMMITTEE CHARACTERISTICS ON MARKET VALUE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA: THE MODERATING EFFECT OF BOARD INDEPENDENCE

Abstract

The Nigerian banking sector has experienced significant growth and transformation in recent years,
making it imperative to assess the factors influencing the market value of deposit money banks (DMBs).
One critical aspect of this evaluation is the effectiveness of audit committees within these banks, as they
play a crucial role in ensuring financial transparency and accountability. This study investigates the
moderating effect of board independence on the relationship between audit committee characteristics and
market value of listed deposit money banks in Nigeria. The data were collected from the annual reports
and accounts of thirteen (13) banks for the period 2014 to 2023. The data were analyzed using fixed effect
regression model. The results indicate that audit committee characteristics have significant effect on firm
value of listed deposit money banks in Nigeria. Specifically, the results indicate that audit committee size,
independence and financial expertise have significant positive effect on firm value. However, audit
committee meetings and firm value was insignificant. The results also indicate that board independence
has a significant positive moderating effect on the relationship between audit committee financial
expertise and firm value. However, board independence has a significant negative moderating effect on
audit committee size and independence, and firm value. The study recommends that regulators of Nigerian
banks should emphasize the critical role of board diversity and independence in corporate governance
effectiveness, insisting on the need for organizations to focus on building boards with members who
possess complementary skills and knowledge, fostering an environment conducive to robust decisionmaking and value creation