Audit judgment performance: Assessing the effect of performance incentives, effort and task complexity

Zuraidah Mohd-Sanusi, Takiah Mohd-Iskandar

    Research output: Contribution to journalArticle

    18 Citations (Scopus)

    Abstract

    Purpose - This study examines the mediating effect of effort on the relationship between performance incentives and audit judgment performance under different levels of task complexity. Design/methodology/approach - Using an experimental research design, subjects are randomly assigned to three performance incentive groups: control, financial and feedback. Each subject is required to perform two experimental tasks of two complexity levels (low and high). Findings - Results indicate that performance incentive variables are positively related to audit judgment performance. Hierarchical regressions of moderated-mediation analyses support the hypotheses that the mediation effect of effort on the relationship between performance incentives and audit judgment performance occurs under low task complexity and not under high task complexity. In other words, the positive relationship between effort and audit judgment performance is weakened under high task complexity. Research limitations/implications - The external validity of this study is limited since the audit case contains less information than the real audit environment. This study contends that the expectancy theory can in fact be used to generate empirical prediction on audit judgment performance. The reliance on expectancy theory to supply theoretical mechanism by including the moderating variables provides explanation on when effort should and should not have positive effects on audit judgment performance. Practical implications - Audit firms need to be careful on the performance incentives offered because incentives affect job output quality. Performance incentives may reduce job turnover and job tension among auditors. In addition, audit firms should ensure that the auditors have proper training to increase their skills and knowledge to help auditors to carry out various job complexities. Originality/value - This paper can enhance knowledge and understanding on how motivational and environment factors influence audit judgment performance.

    Original languageEnglish
    Pages (from-to)34-52
    Number of pages19
    JournalManagerial Auditing Journal
    Volume22
    Issue number1
    DOIs
    Publication statusPublished - 2007

    Fingerprint

    Task complexity
    Audit judgment
    Incentives
    Auditors
    Audit firms
    Expectancy theory
    Audit
    Moderating variables
    Job tension
    Mediation effect
    Group incentives
    Financial control
    External validity
    Experimental research
    Influence factors
    Mediation
    Design methodology
    Research design
    Prediction
    Hierarchical regression

    Keywords

    • Auditing
    • Financial analysis
    • Incentives (psychology)
    • Task analysis

    ASJC Scopus subject areas

    • Business, Management and Accounting(all)
    • Economics, Econometrics and Finance(all)

    Cite this

    Audit judgment performance : Assessing the effect of performance incentives, effort and task complexity. / Mohd-Sanusi, Zuraidah; Mohd-Iskandar, Takiah.

    In: Managerial Auditing Journal, Vol. 22, No. 1, 2007, p. 34-52.

    Research output: Contribution to journalArticle

    Mohd-Sanusi, Zuraidah ; Mohd-Iskandar, Takiah. / Audit judgment performance : Assessing the effect of performance incentives, effort and task complexity. In: Managerial Auditing Journal. 2007 ; Vol. 22, No. 1. pp. 34-52.
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