Examining the moderating effect of audit committee on the relationships between audit quality and the market value of listed deposit money banks (DMBs) in Nigeria

AFRAG044

Examining the moderating effect of audit committee on the relationships between audit quality and the market value of listed deposit money banks (DMBs) in Nigeria

Ishaq Alhaji Samaila Department of Accounting, Bayero

University, Kano 08039643788

ishaqismail005@yahoo.com Kwakipi Akodos Egga

Department of Accounting, Isa Mustapha Agwai 1 Polytechnic, Lafia 08034164888

2014kwakipi.org@gmail.com

Abstract

The study examined the moderating effect of audit committee on the relationships between audit quality and the market value of listed deposit money banks (DMBs) in Nigeria. The study covered ten years from 2009 to 2018 and twelve (12) out of fourteen listed DMBs are censored to ensure complete information. Descriptive research design is used and data are collected from the annual reports and accounts of the twelve sampled listed

DMBs in Nigeria. Multiple regression analysis is used for the data analysis through Stata 12 software version. The results of moderated multiple regression model show that moderated audit fees, moderated auditors’ opinions and moderated joint audits have negative and significant impact on the market value of the listed DMBs in Nigeria while moderated audit firm size and moderated auditors’ switch have negative and insignificant impact on the market value of listed DMBs in Nigeria. The results of moderated audit fee, moderated auditors’ opinions and moderated joint audits are inconsistent with the priori expectations that predict positive relationship of audit fee, auditors’ opinions and joint audits to the value of firms while the results of moderated audit firm size is negative and insignificant which is still contrary to the priori expectation that branded (big4) audit firms increase the value of their client organizations. The result of auditors’ switch shows negative but insignificant impact on the market value of the listed DMBs in Nigeria which is consistent with the priori expectation that a change of auditors results to a reduction in the value of firms. The study, therefore, recommends that audit committee activities must be brought under scrutiny by both the regulatory agencies and shareholders to avoid complacency and ensure that the right auditors are sought to give service to stakeholders of the sector irrespective of size provided they are licensed to operate by their professional bodies. Stiffer punishments aside fines should be meted on the erring audit committees, the auditors and the managements of companies to restore the confidence of stakeholders in the sector. These findings present the implications for all stakeholders to recommend and/or use the right auditors, the right audit committee members, the right regulations, the right governance and people with proven characters and track records that are in consonant with business and professional ethics of honesty and integrity to give value to listed DMBs in Nigeria.

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