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The purpose of this paper is to examine the effects of self-efficacy, goal orientation and task complexity on audit judgement performance in correctly linking audit procedures to audit objectives and types of misstatements.

The authors conducted an experiment audit with 154 auditors from small and medium audit firms in Malaysia as participants. The experimental task required them to link audit procedures to audit objectives and types of misstatements.

For sample of auditors from small and medium audit firms in Malaysia, the authors found that learning goal orientation has a stronger effect on audit judgement performance than performance-approach and performance-avoidance goal orientations. Self-efficacy mediates the effect of goal orientation when an audit task is less complex compared to when the task is more complex.

These results highlight the importance of social cognitive factors in explaining variations in audit judgement performance for audit judgement tasks with different levels of complexity.

The incorporation of individual psychological differences as explanatory variables in audit judgement studies may lead to a better understanding of auditors’ judgement and decision-making processes in small and medium audit firms located in developing economies.

The purpose of this study is to examine the mediating effect of effort on the relationship between both accountability pressure and self‐efficacy, and auditors' performance.

The paper uses a between‐subjects experimental research design with accountability pressure manipulated randomly to two groups, accountable and non‐accountable. Each participant is required to perform internal control tasks.

Based on partial least square (PLS) analysis, results indicate that both variables, i.e. accountability pressure and self‐efficacy, are positively related to audit judgment performance through the process of high level of effort. High self‐efficacious participants who received accountability pressure would have high levels of effort, which in turn increase audit judgment performance.

This study provides further evidence on the effect of motivational factors on auditors' performance. Understanding the mediating role of some motivational variables is crucial in designing a continuous development program to enhance auditors' performance. The proposed framework of effort as a mediating variable is consistent with Libby and Lipe and Chang et al., who argue that accountability pressure and self‐efficacy would cause individuals to increase their effort in order to perform better.

The paper contributes to the literature on motivational factors that would explain the variability in audit judgments in coping with complex audit tasks.

The purpose of this paper is to investigate whether there is any difference in the characteristics of an audit committee between financially distressed and non‐distressed companies listed on the Bursa Malaysia (formerly known as the Kuala Lumpur Stock Exchange). Financial distress among big companies is a sign of weak corporate governance, of which the audit committee is one of elements. Four characteristics of the audit committee being examined are size, independence, activity, and accounting knowledge.

The sample comprises 73 financially distressed and the matched pair of 73 financially non‐distressed listed companies. The financially distressed companies have been suspended from the listing under the provision of the practice note 4 (PN4) of the listing requirements.

Results show that financial distress of companies has a significant negative association with financial literacy of the audit committee and the quality of external audit.

The finding is limited to PN4 companies and the selected match of the non‐PN4. Results may not be generalized to other companies that are faced with financial difficulties but are not classified as financially distressed under the PN4 provision.

The paper does not examine other qualitative factors such as the culture and dynamics of audit committee meetings which may have effect on the audit committee performance. An examination on the issue requires a different research design. Hence, further research is needed to address the issue.

The evidence suggests that financial literacy of audit committee members is a significant factor which helps the audit committee enhance the financial performance of the company. It also suggests that a quality external audit, in addition to an effective audit committee, enhances company financial performance.

This study examines audit fee premiums from brand name, industry specialization, and industry leadership after the merger of two Big 6 audit firms, creating the Big 5 in 1998 in the Malaysian audit market. A sample of 679 companies listed at the main and second boards of Kuala Lumpur Stock Exchange (KLSE) are investigated for audit fee premiums. Industry specialization is determined on the basis of 20 per cent share of audit market calculated by the number of audited companies in the industry. Audit fee premiums are calculated based on the Simunic (1980) model of audit fees. Results show: that Big 5 audit firms obtain 65.4 per cent audit market share for all KLSE listed companies; that Big 5 audit firms earn higher audit fees than non‐Big 5; and that industry specialization does not generate audit fee premiums. The study finds evidence for audit fee premiums derived from industry market leadership. Results also reflect the competitiveness among Big 5 audit firms in the audit market especially following the merger of Big 6 audit firms.

Conflicts between managers and outside auditors may exist in choosing alternative accounting procedures. Since auditors are appointed by the firm, they are subject to dismissal if divergent opinions cannot be resolved. To a lesser extent, financial reports are often negotiated. In order to produce unbiased financial reports, audit committee members are appointed to act independently in order to resolve conflicts between the managers and outside auditors. This study aims to assess the effectiveness of some audit committee characteristics, i.e. the independence of members, size, frequency of meeting and knowledge of the members, to monitor management behavior with respect to their incentives to manage earnings.

This paper uses discretionary accruals obtained from the established model as a signal of the presence of earnings management.

The evidence shows that the presence of a fully independent audit committee reduces earnings management practices. It was also found that firms which had more knowledgeable audit committee members and held more audit committee meetings recorded fewer earnings management practices compared with other firms.

This paper is different from prior studies, in that it makes a significant contribution towards enhancing one's knowledge in the interacting role of audit committee characteristics.

This study examines the effect of the substantial changes in economy and culture on Malaysian accounting practices during the economic growth of 1987 to 1997. This paper provides evidence that accounting practices changed in order to adapt to their new environment. This study provides further evidence that relationships between culture and accounting hold in a changing environment and that Gray's (1988) theory can explain this relationship within the Malaysian context.

This study examines the mediating effect of effort on the relationship between performance incentives and audit judgment performance under different levels of task complexity.

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).

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.

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.

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.

This paper can enhance knowledge and understanding on how motivational and environment factors influence audit judgment performance.