Audit Quality and Firm Value: Evidence from Selected Money Deposit Banks in Abia State, Nigeria

This paper will explore the audit quality and firm value association of some money deposit banks in Abia State, Nigeria. The survey research design was applied, and the sample size of 120 management staff in six banks was used to gather data in the form of structured questionnaires. Firm value was modeled as market capitalization, which was gathered as a result of bank annual reports, but the audit quality dimensions were implemented through the perceptual survey items. The three indicators were audit independence, audit competence, and audit fee that measured audit quality and market capitalization that measured firm value. The results of the multiple regression analysis showed that the audit independence (b = 0.353, p < 0.05) and audit fee (b = 0.311, p < 0.05) have significant impact on firm value, and audit competence (b = 0.127, p > 0.05) did not show a significant relationship. The combined dimensions of audit quality accounted for 31% of the variance in firm value (Adjusted R2 = 0.306, F = 18.475, p < 0.05). The results highlighted the importance of auditor independence and the right audit price in improving the valuation of firms in Nigeria banking industry. The study suggests that there should be more emphasis on the mechanisms of audit independence, quality-reflective audit fee structure, and regulatory oversight to enhance auditor competence and industry specialization in the Nigerian deposit money banks.