Author ORCID Identifier

https://orcid.org/0009-0005-7275-8587

Semester

Spring

Date of Graduation

2026

Document Type

Dissertation (Campus Access)

Degree Type

DBA

College

Chambers College of Business and Economics

Department

Accounting

Committee Chair

Christian Schaupp

Committee Member

Dan Bonneau

Committee Member

Jack Dorminey

Committee Member

Scott Fleming

Abstract

Audit deficiencies remain a persistent concern in the public accounting profession. This study examines whether two organizational factors—performance evaluation style (efficiency-focused vs. less efficiency-focused) and audit billing arrangement (fixed price agreements [FPAs] vs. hourly billing arrangements [HBAs]) —shape perceived fee pressure and the likelihood of engaging in dysfunctional responses, including reduced audit quality acts (RAQA) and underreporting of time (URT). Grounded in expectancy theory, the study employs a 2 x 2 between-participant experiment in which participants (N = 162) evaluate a realistic engagement scenario involving a non-client-specific increase in required audit effort. Hypotheses are tested using OLS regression and PROCESS models to assess direct effects, moderation, mediation, and moderated mediation.

Manipulation check evidence indicates that the performance evaluation manipulation did not meaningfully shift perceptions of the importance of efficiency-based performance metrics (e.g., meeting time budgets), with responses exhibiting a strong ceiling effect across conditions. In contrast, the billing arrangement manipulation produced a statistically significant shift in perceived ability to bill for incremental PCAOB-required work, although agreement to bill for incremental work remained relatively high even in the FPA condition, suggesting ambiguity about partial cost recovery.

Contrary to predictions, billing arrangement did not predict perceived fee pressure. In the fee pressure model, instrumentality, operationalized as the perceived linkage between achieving efficiency-based performance metrics and receiving a favorable performance evaluation, showed a positive association with fee pressure, but it did not moderate the relationship between billing arrangement and fee pressure. Consistent with theory, fee pressure was strongly and positively associated with both RAQA and URT. Moreover, instrumentality strengthened the positive association between fee pressure and each dysfunctional behavior outcome. The fee pressure-RAQA association was statistically significant across low, moderate, and high levels of instrumentality, whereas the fee pressure-URT association was statistically significant at moderate-to-high levels of instrumentality. Consistent with these results, mediation and moderated-mediation predictions involving billing arrangement were not supported because billing arrangement did not predict fee pressure. Notably, after controlling for fee pressure, participants in the FPA condition reported a lower likelihood of RAQA and URT relative to the HBA condition.

Overall, the findings indicate that fee pressure is strongly correlated with dysfunctional behavior likelihood and that instrumentality influences when fee pressure is most likely to translate into RAQA and URT. The study contributes to the audit quality literature by clarifying when billing structures may or may not heighten pressure perceptions and by highlighting instrumentality as an important factor in the fee pressure-dysfunctional behavior relationship.

Download

Share

COinS