Audit quality and the value relevance of fair values

Jimi Ville-Pekka Siekkinen

Research output: Contribution to journalArticleScientificpeer-review

2 Citations (Scopus)


This paper examines whether audit quality and auditor independence have an impact on the information quality of fair values. It is assumed that higher audit quality and higher auditor independence decrease the incentives for managerial opportunism, thereby increasing investors' trust in book values. By analysing financial firms from 28 European countries, this study finds evidence that non-audit services have a positive association with the value relevance of Level 3 fair value assets. Furthermore, the more important the client is to the auditor, the lower is the value relevance of fair value estimates (Level 3). The association between a Big 4 auditor and the information quality of fair value estimates depends on the legal traditions in the firm's home country. The association is positive or non-existent in Northern and Western European countries and negative in Southern and Eastern European countries.
Original languageEnglish
Peer-reviewed scientific journalInternational Journal of Accounting, Auditing and Performance Evaluation
Issue number3
Pages (from-to)227-253
Number of pages27
Publication statusPublished - 09.06.2016
MoE publication typeA1 Journal article - refereed


  • 512 Business and Management
  • IFRS 13
  • fair value accounting
  • auditor independence
  • fair value hierarchy
  • audit quality
  • value relevance


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