The impact of corporate governance and audit quality on value relevance of accounting information

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Abstract

This study aims to investigate the relationship between corporate governance (CG) and audit quality (AQ) in the adequacy of the value relevance of accounting information (VRAI). The study sample included Iraqi firms listed on the Iraqi Stock Exchange (ISE) from 2010 to 2022. Nineteen firms were a research sample selected from 44 firms listed on the ISE. They chose to use the model (Ohlson, 1995) in measuring VRAI, which is based on measuring the absolute value of the level of value relevance to earnings per share (EPS) the absolute value of the book value suitability level VRAI. CG was measured through five factors: board size, gender of board members, independence of the board from the chief executive officer (CEO), ownership percentage of the majority shareholder, and institutional ownership: auditor tenure, audit fees, and audit firm size measured AQ. The study found that CG is associated with a negative and significant relationship with EPS, while AQ is associated with a positive and significant relationship with EPS. The study also found no relationship between CG, AQ, and VRAI as a proxy for the appropriate VRAI. The results also indicate the weak role of regulatory variables, which decreased the marginal slope coefficient results for the models used.

Keywords: Value Relevance, Corporate Governance, Audit Quality, Earnings Per Share, Book Value

Authors’ individual contribution: Conceptualization — H.H.F.A.-F.; Methodology — H.H.F.A.-F.; Formal Analysis — H.H.F.A.-F.; Investigation — S.I.A. and H.H.F.A.-F.; Data Curation — H.H.F.A.-F.; Writing — Original Draft — H.H.F.A.-F.; Writing — Review & Editing — S.I.A. and H.H.F.A.-F.; Visualization — S.I.A. and H.H.F.A.-F.; Supervision — H.H.F.A.-F.; Project Administration — H.H.F.A.-F.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: H83, M12, M40, M41

Received: 17.08.2024
Revised: 28.11.2024; 03.04.2025; 29.08.2025
Accepted: 26.09.2025
Published online: 30.09.2025

How to cite this paper: Ali, S. I., & Al-Fandawi, H. H. F. (2025). The impact of corporate governance and audit quality on value relevance of accounting information. Journal of Governance & Regulation, 14(4), 44–53. https://doi.org/10.22495/jgrv14i4art4