Does Audit Quality Enhance the Value Relevance of Earnings and Book Value on the Market Price of Common Shares? Evidence from Thailand

This study examines whether audit quality enhances the value relevance of earnings and book value of equity in explaining market prices of common shares in Thailand’s emerging market. Using data from 401 non-financial firms listed on the Stock Exchange of Thailand between 2021 and 2023, we analyze 1203 firm-year observations collected from Bloomberg and company annual reports. Multiple regression results show that earnings per share (EPS), book value per share (BVPS), and audit quality measures are significantly associated with share prices. Audit quality is proxied by audit firm size, audit fees, and financial statement irregularities (Beneish M-score). Big 4 auditors increase the relevance of book value, while higher audit fees strengthen the earnings–price relationship. Conversely, firms with higher M-scores, signaling potential earnings manipulation, display weakened associations between accounting metrics and share value. These findings highlight audit quality’s role in reducing information asymmetry, reinforcing investor trust, and supporting market efficiency in a post-crisis environment. By integrating audit quality into the Ohlson valuation framework, this study contributes to the literature on audit assurance and capital market behavior in emerging economies, offering insights for investors, regulators, and managers regarding the credibility of financial reporting.

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Publication Details

Journal
Journal of risk and financial management
Published
2025-09-29
DOI
https://doi.org/10.3390/jrfm18100547
Primary Topic
Auditing, Earnings Management, Governance
Type
article
Field-Weighted Citation Impact
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article

Does Audit Quality Enhance the Value Relevance of Earnings and Book Value on the Market Price of Common Shares? Evidence from Thailand

Nimnual Visedsun, Somnuk Aujirapongpan, Kenika Haekerd, Pimook Kwanmuang
Journal of risk and financial management
Auditing, Earnings Management, Governance
article

Does Audit Quality Enhance the Value Relevance of Earnings and Book Value on the Market Price of Common Shares? Evidence from Thailand

Nimnual Visedsun, Somnuk Aujirapongpan, Kenika Haekerd, Pimook Kwanmuang
article en

Abstract

This study examines whether audit quality enhances the value relevance of earnings and book value of equity in explaining market prices of common shares in Thailand’s emerging market. Using data from 401 non-financial firms listed on the Stock Exchange of Thailand between 2021 and 2023, we analyze 1203 firm-year observations collected from Bloomberg and company annual reports. Multiple regression results show that earnings per share (EPS), book value per share (BVPS), and audit quality measures are significantly associated with share prices. Audit quality is proxied by audit firm size, audit fees, and financial statement irregularities (Beneish M-score). Big 4 auditors increase the relevance of book value, while higher audit fees strengthen the earnings–price relationship. Conversely, firms with higher M-scores, signaling potential earnings manipulation, display weakened associations between accounting metrics and share value. These findings highlight audit quality’s role in reducing information asymmetry, reinforcing investor trust, and supporting market efficiency in a post-crisis environment. By integrating audit quality into the Ohlson valuation framework, this study contributes to the literature on audit assurance and capital market behavior in emerging economies, offering insights for investors, regulators, and managers regarding the credibility of financial reporting.

Journal of risk and financial managementVol. 18(10)
Silpakorn University (TH), Rangsit University (TH)
Openalex Percentile: Top 61%
Auditing, Earnings Management, Governance
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