EFFECT OF AUDIT QUALITY ON FIRM VALUE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA: FURTHER EVIDENCE

Abstract

This study analyses the effect of audit quality on firm value of listed deposit money banks in
Nigeria, whereby the elements of audit tenure and auditor independence are discussed and
used as explanatory variables. Based on expost facto research design, the research examined
archival data of 14 deposit money banks that are listed on the Nigerian exchange group
between 2015 and 2024 through census sampling technique. Using pooled ordinary least
squares (OLS) regression we ran the robust standard errors. The findings indicate that greater
length of audit tenures has an immense positive effect and greater auditor independence also
has immense positive effect explaining together 45 percent of the variance in firm valuations.
This implies that there is the need of long-term auditor and client relationships, and effective
independence protection as an important source for market confidence and shareholder value
in the banking industry in Nigeria. The study suggested that regulators and bank audit
committees should support the best practices tenure (e.g. five to seven years) and enhance the
independence policies, including partner rotation in order to facilitate firm value and ensure
sustainable growth.