Baffa, Asma’u Mahmood and Lasisi, Isiaka Olalekan and Ojo, Tolulope Comfort (2023) Auditor Tenure, Audit Firm Size and Value Relevance of Accounting Information of Quoted Companies in Nigeria. European Journal of Accounting, Auditing and Finance Research, 11 (7). pp. 101-116. ISSN 2053-4086(Print), 2053-4094(Online)
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Abstract
The paper assesses the value relevance of the tenure of auditors and size of audit firm by using empirical data from actively traded firms on the floor of Nigerian Exchange Group. Data for the study were obtained from the published annual reports and accounts of 124 quoted companies in Nigeria between 2012 to 2021. The average -monthly share price of the fourth month after accounting year end of all sampled firms was utilized as the dependent variable of the study in order to establish the value relevance of accounting information in the financial statements, Incorporating the explanatory variables of the study (auditor tenure and control variables) into The Ohlson’s 1995 price model quantitative approaches such as descriptive statistics, correlation, and panel corrected standard errors regression analysis were used in analyzing the data for the study. Findings of the study indicate that auditor tenure and audit firm size led to significant positive influence on market reaction in the first month after the release of annual reports and accounts of sampled firms. This means that, auditor tenure and audit firm size were found to be value relevant to users of accounting information in Nigeria. The study recommends that investors should consider the audit tenure and auditors size when making investment decisions and prioritize firms that have been audited by big auditors and by integrating small audit firms, as well as firms whose audit tenure is on average of five to six years in line with International best practices, rather than ten years as stipulated by the Code of Corporate Governance and CBN.
| Item Type: | Article |
|---|---|
| Subjects: | H Social Sciences > H Social Sciences (General) |
| Depositing User: | Professor Mark T. Owen |
| Date Deposited: | 11 Jul 2023 09:55 |
| Last Modified: | 11 Jul 2023 09:55 |
| URI: | https://tudr.org/id/eprint/1965 |
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