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Article
Publication date: 1 February 2021

Mahdi Salehi, Safoura Rouhi, Mohana Usefi Moghadam and Faezeh Faramarzi

Success in corporate relative performance is one of the factors for the growth and durability of firms. Since the relative performance is a function of managers' decisions…

Abstract

Purpose

Success in corporate relative performance is one of the factors for the growth and durability of firms. Since the relative performance is a function of managers' decisions and such decisions are under the influence of behavioral and psychological characteristics, this paper aims to assess the managers’ and auditors’ narcissism's effect on the management team's stability relative to corporate performance.

Design/methodology/approach

This paper has used the signature magnitude for examining narcissism and the regression model of Jenter and Kanaan (2015) for assessing relative corporate performance. The logistic regression is used to test the model of the management team's stability, and the multivariate regression is used to test the model of relative corporate performance. Research hypotheses were also examined using a sample of 768 listed year-companies on the Tehran Stock Exchange during 2012–2017 and by employing a panel data approach and fixed effects method.

Findings

The obtained results show a negative and significant relationship between managers' and auditors' narcissism and the management team's stability. The relationship between the narcissism of managers and auditors and relative corporate performance is positive and significant. Moreover, managers' narcissism positively and significantly impacts the relationship between auditors' narcissism and team management stability. A negative and significant relationship is evident between auditors’ narcissism and relative corporate performance.

Originality/value

This study's results can identify the effect of psychological components such as narcissism on people's performance by directing and influencing their decisions. Many studies have been conducted on narcissism, but none of them have examined the impact auditors’ and managers' narcissism has on the management team's stability and the corporate relative performance. Therefore, considering the importance of success in the corporate relative performance and benefits of the management team's stability, this study's results can reveal the importance of such features in accounting research. Also, the results of this research can make it important to know more about financial behavioral theory.

Details

International Journal of Productivity and Performance Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1741-0401

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Book part
Publication date: 12 October 2016

Arch G. Woodside, Xin Xia, John C. Crotts and Jeremy C. Clement

The study here helps to fill the gap between the current practices of management performance audits for firms and government agencies. The study advances recent theories…

Abstract

The study here helps to fill the gap between the current practices of management performance audits for firms and government agencies. The study advances recent theories of program evaluation and marketing management auditing. While the application in this chapter refers to government agencies managing destination marketing programs (tourism agencies), the algorithmic model construction is applicable for all management audits. The study applies the perspectives from two streams of theory to describe five relevant activities for managing destination marketing programs: scanning, planning, implementation, assessing, and administering. The analysis proposes impact assessments to improve management performances of DMOs via checklists for assessing the quality of information in tourism-management performance audits. Checklists can serve as a management tool by management performance auditors and by DMO executives to enhance the quality in executing destination marketing programs. A meta-evaluation of 10 tourism management audit reports identifies good and bad practices. The findings indicate that substantial improvements are possible in the practice of DMO’s management performance auditing, and the proposed checklist may ensure both high quality performance audit reports and improved performances in DMO practices.

Details

Making Tough Decisions Well and Badly: Framing, Deciding, Implementing, Assessing
Type: Book
ISBN: 978-1-78635-120-3

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Article
Publication date: 1 January 2014

Marietta Peytcheva

This paper aims to study the effects of two different types of state skepticism prompts, as well as the effect of the trait of professional skepticism on auditor cognitive…

Abstract

Purpose

This paper aims to study the effects of two different types of state skepticism prompts, as well as the effect of the trait of professional skepticism on auditor cognitive performance in a hypothesis-testing task. It examines the effect of a professional skepticism prompt, based on the presumptive doubt view of professional skepticism, as well as the effect of a cheater-detection prompt, based on social contracts theory.

Design/methodology/approach

Seventy-eight audit students and 85 practising auditors examine an audit case and determine the evidence needed to test the validity of a management's assertion in a Wason selection task. The experiment manipulates the presence of a professional skepticism prompt and the presence of a cheater-detection prompt. The personality trait of professional skepticism is measured with Hurtt's scale.

Findings

The presence of a professional skepticism prompt improves cognitive performance in the sample of students, but not in the sample of auditors. The presence of a cheater-detection prompt has no significant effect on performance in the student or auditor sample. The personality trait of professional skepticism is a significant predictor of cognitive performance in the sample of students but not in the sample of auditors.

Research limitations/implications

Results suggest that increasing the states of skepticism or suspicion toward the client firm's management may have no incremental effect on the normative hypothesis testing performance of experienced auditors. However, actively encouraging skeptical mindsets in novice auditors is likely to improve their cognitive performance in hypothesis testing tasks.

Originality/value

The study is the first to examine the joint effects of two specific types of state skepticism prompts, a professional skepticism prompt and a cheater-detection prompt, as well as the effect of the personality trait of professional skepticism, on auditor cognitive performance in a hypothesis-testing task. The study contributes to the literature by bringing together the psychology theory of social contracts and auditing research on professional skepticism, to examine auditors' reasoning performance in a hypothesis-testing task.

Details

Managerial Auditing Journal, vol. 29 no. 1
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 26 July 2019

Rabih Nehme, Christelle AlKhoury and Abdullah Al Mutawa

The purpose of this paper is to identify differences in auditors’ dysfunctional behaviour when expecting performance appraisal. Its main aim is to examine variances across…

Abstract

Purpose

The purpose of this paper is to identify differences in auditors’ dysfunctional behaviour when expecting performance appraisal. Its main aim is to examine variances across countries; UK vs Kuwait. Also, it identifies differences between experienced and inexperienced auditors.

Design/methodology/approach

The paper focuses on dysfunctional audit behaviour (DAB) where premature sign-off and under-reporting of chargeable time are chosen as the two main signalling proxies. A survey made up of statements included in performance appraisal templates is distributed among auditors working for the Big Four firms in both, the UK and Kuwait.

Findings

The paper shows how performance evaluation of external auditors affects their behaviour in the workplace. From a cultural standpoint, assessing the performance of auditors whilst working in a competitive market in a developed country is regarded as a potential driver for DAB variations. Evaluating auditorsperformance in a developing country is seen as a stabiliser of DAB. This research paper demonstrates that experienced auditors have a greater tendency to behave dysfunctionally as compared to inexperienced auditors.

Originality/value

Prior studies have been conducted to assess auditorsperformance through using internal and external attributes (Kaplan, 1985), offshoring basic steps of audit work (Downey, 2018), and the perception of audit clients about auditorsperformance (Reheul et al., 2013). Such studies were conducted mostly on developed countries on a standalone basis. In this study, the focus has been shifted from focusing on one country to comparing two different countries. The paper examines DAB between experienced and inexperienced auditors in the UK and in Kuwait when expecting performance evaluation.

Details

International Journal of Productivity and Performance Management, vol. 69 no. 9
Type: Research Article
ISSN: 1741-0401

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Article
Publication date: 28 January 2020

Nirmala Nath, Radiah Othman and Fawzi Laswad

This paper aims to provide insights into how the New Zealand Office of the Auditor-General (NZOAG) legitimised the selection of topics for performance audit in the New…

Abstract

Purpose

This paper aims to provide insights into how the New Zealand Office of the Auditor-General (NZOAG) legitimised the selection of topics for performance audit in the New Zealand public health sector over a 10-year period, 2003-2013, by fulfilling the key actors’ “taken for granted beliefs” of the dual roles of the NZOAG: its independence and accountability.

Design/methodology/approach

This paper uses evidence gathered from interviews with representatives of the District Health Boards, the Ministry of Health (including Health Advisory Committee members) and NZOAG staff, along with publically available documentary evidence over a 10-year period. The authors draw on Suchman’s (1995) authority on institutional legitimacy to inform the research findings.

Findings

The New Zealand Auditors-General (NZAGs) get inputs from various sources such as their own audit teams, parliamentary deliberations, the Ministry of Health, the District Health Boards, media and public concerns and complaints. These sources initiate ideas for performance audits. Subsequently, the NZAGs use the recurring themes and risk assessment criteria while simultaneously consulting with the auditees (the MOH and the DHBs) and other actors, such as health advisory groups, to select topics for such audits. This signals to the key actors, such as the MOH and the DHBs, that the NZOAG is addressing the topics and concerns relevant to the former while discharging its public accountability role. Furthermore, the consultative approach acts as a catalyst, ensuring that the actors involved with public sector health service delivery, specifically the auditees, accept the selected topic. This leads to a lack of resistance to and criticism of the topic; the selection process, therefore, is legitimatised, and credibility is added to the audits. Because of the consultative approach taken by the NZAGs, the actors, including the performance auditors, continue to believe that the Office acts independently from third party influence in selecting their audit topics, elevating the NZAGs’ moral legitimacy with respect to their public accountability role.

Research limitations/implications

The study’s focus group does not include parliamentary representatives, only representatives from the DHBs, the MOH and the NZOAG; therefore, the conclusions on effective discharge of the NZOAG’s accountability role and Parliamentary acceptance is not conclusive – the NZOAG acts on behalf of the Parliament in discharging its accountability role and the latter is also the formal recipient of the reports.

Practical implications

The implications for practitioners and policymakers are that the use of a consultative approach to select topics for performance audit in the absence of performance auditing standards ensures auditee readiness and acceptance of such audits. This also promotes mutual benefits and “trust” between the AG and auditees. Such audits can be used to bring about efficacy in health service delivery.

Social implications

The selected topics for audits will have an impact on citizens’ lifestyles, with improved health services delivery.

Originality/value

There is a dearth of research on who initiates the ideas for performance auditing and how the Office of the Auditor-General selects topics for such audits. This study adds a new dimension to the existing performance auditing literature. The authors reveal how the NZOAG seeks to legitimise the selection of topics for such audits by consulting with the auditees and other actors associated with public sector health service delivery, while upholding its independent status and making transparent how it discharges its accountability role within the context of performance auditing.

Details

Qualitative Research in Accounting & Management, vol. 17 no. 2
Type: Research Article
ISSN: 1176-6093

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Article
Publication date: 6 February 2017

Rabih Nehme

The purpose of this paper is to investigate factors leading to dysfunctional behavior. The role of auditors has been under scrutiny during recent accounting scandals…

Abstract

Purpose

The purpose of this paper is to investigate factors leading to dysfunctional behavior. The role of auditors has been under scrutiny during recent accounting scandals. Auditors, among other parties, are sometimes to be blamed as a result of economic crisis periods. The paper highlights certain auditors’ behavior leading to dysfunctional acts.

Design/methodology/approach

The survey of this paper is made up of statements extracted from the performance appraisal templates used at the Big Four firms in the UK. Big Four auditors are expected to be under pressure more than non-Big Four auditors. The sample is stratified into non-experienced/experienced auditors to highlight any changes in the perception of dysfunctional behavior when the experience factor exists.

Findings

The paper finds that certain performance appraisal procedures are leading to dysfunctional acts. Accordingly, audit firms should develop other evaluation techniques that should serve their goals without pushing auditors for dysfunctional behavior.

Originality/value

This study links procedures embedded in the performance appraisals at the Big Four audit firms to dysfunctional behavior. Also, the study covers all lines of auditors to understand how the perception toward dysfunctional behavior differs when auditors gain experience.

Details

Managerial Auditing Journal, vol. 32 no. 2
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 5 May 2014

Danielle Morin

The influence that Supreme Audit Institutions (SAIs) exert on management of administrations through performance audits has been examined very little and questioned even…

Abstract

Purpose

The influence that Supreme Audit Institutions (SAIs) exert on management of administrations through performance audits has been examined very little and questioned even less. This study of the impact of Auditors General (AG) on management of six Canadian administrations for the 2001-2011 period aims to highlight the auditors ' successes and the limits imposed on them in their role of agents of change for administrations.

Design/methodology/approach

A survey was sent out to a total of 125 respondents identified by the authorities of the targeted organizations. Eighty-seven usable questionnaires were completed (70% response rate).

Findings

AG appear to influence the organizational life of Canadian entities to a moderate extent. The figures suggest that auditors do exert an influence on the organizations audited, but their influence attempts fail fairly often. Indirect powers to reward and punish conferred on AG by their institutional status are conditioned not only by the will of the central and political authorities of the entities audited but also by the will and capacity of parliamentarians to assume real control over the executive branch. One explanation for this mitigated influence is that the “obligatory reverence” that SAIs inspire in administrations masks the real value that auditees perceive in auditors ' work.

Research limitations/implications

Given the ten-year period that the study covered, it had to deal with the mortality of respondents and the loss of organizational memory.

Practical implications

The study gives insights about the auditees ' recognition regarding the auditors ' added value to administrations through their performance audits.

Originality/value

This paper fulfils an identified need for further empirical research on AG ' s impact on administrations through their performance audits.

Details

Managerial Auditing Journal, vol. 29 no. 5
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 January 2009

Steve Buchheit, William R. Pasewark and Jerry R. Strawser

The purpose of this paper is to investigate whether audit professionals exhibit greater performance evaluation bias compared to non‐accounting professionals.

Abstract

Purpose

The purpose of this paper is to investigate whether audit professionals exhibit greater performance evaluation bias compared to non‐accounting professionals.

Design/methodology/approach

Both audit and non‐accounting professional subjects read a case study and evaluated the performance of a hypothetical subordinate. Two factors were manipulated the subordinate's work performance history and the subordinate's current performance relative to a budget.

Findings

It was found that reputation bias and hindsight bias are prevalent in both professional groups. The groups exhibit no difference with respect to reputation bias; however, it was found that public accountants exhibit significantly greater hindsight bias relative to non‐accounting professionals.

Practical implications

The paper provides evidence that accountants are relatively harsh critics of subordinate performance. Importantly, the paper investigates accountant vs non‐accountant comparisons where subordinates' ex ante decisions are consistent with superiors' ex ante guidance (i.e. ex post performance being either favorable vs unfavorable is purely outcome‐effect driven). If the findings are robust, this study provides a fundamental reason why employee retention in public accounting is relatively low.

Originality/value

This paper is the first to make direct comparisons of performance evaluation bias effects between auditors and similarly experienced working professions.

Details

Managerial Auditing Journal, vol. 24 no. 1
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 February 2016

Chew Har Loke, Suhaiza Ismail and Fatima Abdul Hamid

The purpose of this paper is to explore the perception of public sector auditors on performance audit in Malaysian public sector entities. In particular, this study…

Abstract

Purpose

The purpose of this paper is to explore the perception of public sector auditors on performance audit in Malaysian public sector entities. In particular, this study elicits the respondents’ opinions on the elements of performance audit, the need for involvement of auditors in policy making, relevant experts to undertake a performance audit, major constraints in carrying out performance audit and the potential of performance audit to improve public administration.

Design/methodology/approach

The study employed a postal questionnaire method to seek the perception of the auditors. The questionnaire was distributed to the population of public sector auditors in the National Audit Department in Malaysia and a total of 503 usable responses were received. The responses were analysed using descriptive statistical analysis including mean score and mean score ranking.

Findings

The results reveal that auditors were of the opinion that effectiveness element should be one of the performance audit elements and that public sector auditors should be given the opportunity to influence policy decisions. In addition, the results show that the public auditor is not the only profession that can carry out performance audit, but can team up with other professions. In relation to constraints in performance audit, “Lack of cooperation and commitment from auditees in conducting a performance audit” was claimed to be the topmost constraint. Furthermore, performance audit was claimed to be able to enhance public accountability, as well as to enable more economical, efficient and effective utilising of public resources.

Originality/value

This paper is one of few studies on public sector auditing particularly on performance auditing in the context of a developing country (i.e Malaysia).

Details

Asian Review of Accounting, vol. 24 no. 1
Type: Research Article
ISSN: 1321-7348

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Book part
Publication date: 28 July 2008

Carlin Dowling and Robyn Moroney

The extant literature has established that industry-specialist auditors gain performance-enhancing industry-specific sub-specialty knowledge (e.g., Solomon, Shields, &…

Abstract

The extant literature has established that industry-specialist auditors gain performance-enhancing industry-specific sub-specialty knowledge (e.g., Solomon, Shields, & Whittington, 1999) via training and on the job experience. This knowledge has been shown to allow specialists to outperform non-specialists on a range of industry-specific tasks. The current study extends this line of research by comparing and contrasting the relative performance gains enjoyed by industry-specialist auditors in two different industry settings, one regulated and the other unregulated. When specializing in regulated industries, auditors gain very detailed industry-specific knowledge which is not the case for specialists in unregulated industries (Dunn & Mayhew, 2004). By comparing industry-specialists to non-specialists with matching industry-based experience, this study measures the relative benefits of specialization in different industry settings, rather than the benefits of specialization per se, which has been well established in the literature. This study finds that the performance gains made by regulated industry-specialists significantly outweigh those made by unregulated industry-specialists on industry-specific tasks. The implications of these results for future research and practice are explored in the body of the chapter.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-84663-961-6

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