ABSTRACT

This study examined the Effect of audit quality on value relevance of quoted companies in Nigeria.  The objective of this study was to examine the effect of audit  independence,  audit  expertise  and audit  size  on earnings  per  share of quoted firms in Nigeria. The purposive sampling method was used to select  the

8 deposits money banks that are listed on the Nigerian stock exchange between the period 2010 to 2015.  The secondary source of data was use to extract data from the audited financial  statements of the samples banks.  Audit quality was estimates using;  audit independence, audit expertise and audit size.  Earnings  per share was derived by dividing the net profit or loss of the period attributed to shareholders  by  the  number  of  ordinary  shares  outstanding.  The  multiple regression  technique  using  Ordinary Least  Square regression  (OLS)  method were  conducted  on  the  data.   The  result  of  the  findings  showed  that  audit independence as a proxy for audit quality has an effect on the earnings per share of listed firms in Nigeria while audit expertise  and size has no significant effect on the earnings per share or listed firms in Nigeria. In order to improve audit quality and minimize earnings manipulations by firms in Nigeria,  the following recommendations   become imperative;  listed  firms in Nigeria should maintain  a policy  of enhancing a more  independent  audit committee  as this can greatly affect the value  relevance  of the listed firms, although  audit  expertise  and size has no effect on the earnings per share of the listed firms but it is paramount for them to set up an audit committee  with  more financial  expertise and size that is, bringing  in more  audit  committee   members  that  are trained  in  finance  and bringing  in the required number of audit size members so as to enhance a better financial   reporting   of  the  firms  and  enhance  the  value  relevance   of  their financial  statement by the firms.

CHAPTERONE: INTRODUCTION

1.1      Background   to the Study                                                                                      1

1.2     Statement  of the Problem                                                                                3

1.3        Objectives  of the Study                                                                                   5

1.4     Research  Questions                                                                                           6

1.5        Research  Hypotheses                                                                                        6

1.6     Significance   of the Study                                                                                7

1.7     Scope of the Study                                                                                           7

1.8     Limitations   of the Study                                                                                  8

CHAPTER TWO: REVIEWOF RELATED LITERATURE

2.1      Conceptual   Framework                                                                                     10

2.1.1   The Concept  of Value  Relevance                                                                    10

2.1.2    Audit  Quality  Characteristics                                                                           12

2.2      Theoretical  Literature                                                                                  16

2.2.1  Audit Committee Independence and value relevance of Financial statement                                              

2.2.2  Financial  Expertise of Audit Committee Members and value Relevance of financial  statement                           

2.2.3 Audit Committee Size and value relevance of financial Statement 19

2.3   Theoretical Framework 20

2.3.1  Signalling Theory 21

2.3.2 Agency Theory 21

2.3.3  The Bird in Hand  theory                                                                         24

2.4    Empirical Review 25

2.5    Summary of Empirical Review 37

CHAPTERTHR E:METHODOLOGY

3.1   Research Design 40

3.2  Population  of the Study 41

3.3   Sample Size and Sampling Techniques 41

3.4    Sources of Data 42

3.5    Data Analysis  Technique 42

3.6   Definition of Variables 42

3.6.1  Independent Variables 42

3.6.2 Dependent Variable 43

3.7   Model Specification 43

3.8   Limitation of the Methodology 44

CHAPTER  FOUR: DATA PRESENTATION, ANALYSIS AND

INTERPRETATION

4.1  Data Presentation 46

4.2   Data Analysis 46

4.2.1  Data Validity Test 46

4.2.2 Descriptive Statistics 48

4.2.3 Regression of the Estimated Model Summary 49

4.2.4 Regression Results 51

4.3 Test of Research Hypotheses 52

4.3.1. Test of Research Hypothesis  One 52

4.3.2. Test of Research Hypothesis Two 52

4.3.3. Test of Research Hypothesis  Three 53

4.4 Discussion of Findings 53

CHAPTER FIVE:  SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary 56

5.2 Conclusions 56

5.3 Recommendations 57

5.4 Suggestion for Further Research 57

References

Appendix