EFFECT OF AUDIT QUALITY ON MARKET VALUES OF LISTED FINANCIAL SERVICES COMPANIES IN NIGERIA

Abstract

The main aim of this study is to ascertain the effect of audit quality on market value of financial
services companies listed on the Nigerian Exchange Group (NGX). The population consists of
45 finance services firms listed on the Nigerian Exchange, out of which a sample of 35 was used
using purposive sampling technique. Using the ex-post facto research design, data were
obtained from the annual reports of the companies for the years 2011 to 2021. The data were
analyzed using the panel regression analysis and the descriptive statistics. It was found that
audit opinion has a negative and insignificant influence on firm market value; audit tenure has
a positive and insignificant effect on market value, while audit firm size and audit fees have
significant influence on the firm's market value. The study recommends that, because of the
inverse relationship between audit firm size and market value of the firms, finance firms should
consider the use of non-Big 4 audit firms for audit. Similarly, audit fees should be cautiously
considered to balance the positive effect it has on the firm's market value.