EFFECT OF AUDIT QUALITY ON VALUE RELEVANCE OF ACCOUNTING INFORMATION OF LISTED NON-FINANCIAL SERVICE FIRMS IN NIGERIA

Abstract

The importance for high quality audit and accounting information to investor at the stock market
has long been established by the signaling theory. Accordingly, high quality audit tends to improve
the quality of accounting information signaled to the stakeholders outside the firms. Hence, audit
quality is expected to have significant influence on the value relevance of accounting information.
This study followed the correlational research designed to examine the effect of audit quality on
value relevance of accounting information for the period of five (5) years (2015-2019). The
population of the study is made up of 74 listed non-financially service firms in the Nigerian stock
exchange. All the 74 firms were used as sample of the study based on census sampling. Audit
quality represented as BIG-4 and Non-BIG-4, was measure using dummy variable 1 and 0,
respectively. While accounting information were represented with Book value per share (BVP)
and Earing per share (EPS). Ordinary least square regression was used to analyse the data. The
result shows that audit quality has a significant influence on the value relevance of the accounting
information. The study recommends that non- financial service firms should appoint highly
qualified and experienced auditor as doing so has the ability improve shareholders’ confidence in
the quality of the financial statements issued by the company.