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

Nimnual Visedsun, Kenika Haekerd, Pimook Kwanmuang and Somnuk Aujirapongpan ()
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Nimnual Visedsun: Faculty of Accountancy, Rangsit University, Pathum Thani 12000, Thailand
Kenika Haekerd: Faculty of Accountancy, Rangsit University, Pathum Thani 12000, Thailand
Pimook Kwanmuang: Faculty of Accountancy, Rangsit University, Pathum Thani 12000, Thailand
Somnuk Aujirapongpan: Faculty of Management Science, Silpakorn University, Phetchaburi 76120, Thailand

JRFM, 2025, vol. 18, issue 10, 1-14

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.

Keywords: value relevance; audit quality; Stock Exchange of Thailand (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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