THE ROLE OF EXTERNAL AUDITS IN BUILDING INVESTOR CONFIDENCE: HOW INDEPENDENT ASSURANCE INFLUENCES STOCK MARKET PERFORMANCE

External audits play a crucial role in enhancing investor confidence by ensuring transparency, accountability, and financial integrity in stock markets. This study examines the impact of independent external audits on investor trust and stock market performance between 2015 and 2019. The research employs a quantitative approach, analyzing data from 200 publicly traded firms audited by both Big 4 and non-Big 4 firms. Statistical analysis reveals a strong positive correlation (r = 0.97) between audit quality and investor confidence, while regression results (β = -1.17, p < 0.001, R² = 0.90) indicate that higher audit quality significantly reduces stock price volatility. Additionally, Chi-Square tests confirm a significant association (χ² = 10.00, p = 0.0067) between auditor reputation and investor trust. Findings suggest that firms with high-quality external audits experience greater stock price stability, reduced financial misstatements, and enhanced investor participation. The study recommends stricter regulatory oversight, increased adoption of forensic auditing techniques, and leveraging AI-driven audit mechanisms to further improve financial transparency. These insights have implications for policymakers, corporate governance, and financial market stability, underscoring the need for continuous audit enhancements to safeguard investor interests.