This study aims to investigate the effects of individual knowledge/experience on the audit expectation gap of loan officers in Malaysia and the subsequent effect of the audit expectation gap on their loan decision quality. In addition, the mediation role of the audit expectation gap is examined.
Copies of a structured questionnaire were randomly distributed to three hundred and twenty loan officers of the top four commercial banks in Malaysia. A total of 212 completed questionnaires were analysed using structural equation modelling.
The findings indicate that the knowledge/experience factors could significantly mitigate the audit expectation gap. More importantly, the audit expectation gap is found to adversely affect the loan decision quality. The mediating role of the audit expectation gap is also supported.
The findings of this study may not be generalizable to other economic, cultural and political settings.
Banks may narrow their loan officers' audit expectation gap and hence, their non‐performing loans through selective recruitment or appropriate knowledge/skill enhancement in‐house training programmes.
This study provides the needed empirical evidence of the adverse effect of audit expectation gap on the loan decision quality of bank officers in Malaysia. Unlike the 2009 findings of Noghondari and Foong, which was based on an Islamic banking context in Iran, this study, which was based on the conventional banking context, found that accounting‐related and job‐related work experience of bank officers had significantly mitigated the audit expectation gap. The findings have important implications on the recruitment and training of loan officers by banks.
Taebi Noghondari, A. and Foong, S. (2013), "Antecedents and consequences of audit expectation gap: Evidence from the banking sector in Malaysia", Managerial Auditing Journal, Vol. 28 No. 5, pp. 384-406. https://doi.org/10.1108/02686901311327182Download as .RIS
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