Abstract
This study examined audit reports and value relevance of accounting information in Nigeria quoted commercial banks. Data was sourced from financial statement of Commercial Banks. Two multiple regressions were formulated to investigate the effect of audit reports and audit characteristics on stock prices of the commercial banks. The data analysis technique employed is the multiple regression model based on Statistical Package for Social Sciences version (22.0). The Durbin-Watson statistics show the presence of multiple serial autocorrelation. The result shows collinearity that corresponds with the Eigen value condition index and variance constants are less than the required number, while the variance inflation factors indicate the absence of auto-correlation. The result from model I found that all the audit report variables have positive impact on value relevance while model II found that audit compensation, audit familiarity and corporate governance have positive effect and audit independence, joint audit and audit size have negative effect on stock prices. The study concludes that the independent variables have significant relationship value relevance of accounting information of Nigeria quoted commercial banks. We recommend that auditing should principle of corporate management beyond the present statue.
Highlights
Financial statement users rely on the auditor‟s report to provide assurance on the company‟s financial statements
The results showed that earnings and book value are, jointly and individually, positively and significantly related to stock price under the two different reporting regimes
The most value relevant variable is the earnings while the least value relevant variable is the return on equity in Sri Lanka, Abiodun (2012) who found that earnings isomer value relevant than book values and the findings of Suadiye (2012) whose results showed that earnings and book value are, jointly and individually, positively and significantly related to stock price under the two different reporting regimes
Summary
Financial statement users rely on the auditor‟s report to provide assurance on the company‟s financial statements. The concern of stakeholder is financial information as reported by auditors should communicate the appropriate information. The concept of value relevance originates from the work of Ball and Brown (1968) and Beaver (1968) investigating whether investor‟s availability on accounting information is useful information when taking investment decisions. The main objective of value relevance research is to examine whether there is a statistical relationship between financial statement variables as reported by auditors and market variables. The concept of value relevance refers to the ability of accounting information to be reflected in stock values (Francis & Schipper, 1999). Value relevance has to do with the summarization of accounting information which affects stock values in such a way that the investors can come up with an informed decision, that has to do with an organization. Apart from CAMA, accounting bodies such as www.cribfb.com/journal/index.php/ijfb
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