The effects of audit firm structure and auditor locus of control on auditor acquisition, compensation, performance, and retention

The purpose of this dissertation is to examine the effect of audit structure and auditor locus of control on human resource acquisition, compensation, performance, and retention. The study of human resources is important since labor cost is the most significant cost of accounting firms. An understanding of the relation among factors influencing this cost is of primary importance in managing it.; The study examines the effects of the interaction of audit structure and locus of control on performance at staff through manager levels. The results extend current research by examining the effects of the interaction on employee acquisition (hiring), retention, and employee salaries.; Tests of job performance indicate that the interaction between audit structure and auditor locus of control is significant. People who believe they control their destinies (internals) perform at higher levels at unstructured firms than at structured firms. People who believe that their destinies are controlled by luck or chance (externals) perform at higher levels at structured firms than at unstructured firms. It is also found that internals perform at higher levels than externals in unstructured environments. Although not significantly, the data pattern also indicates externals perform at higher levels than internals in structured environments.; While tests of auditor compensation (salary) indicate some support for the hypothesis, the interaction between audit structure and auditor locus of control is not significant in the regression model. However, it does appear that internal managers at unstructured firms are compensated at a higher level than external managers.; Tests of auditor retention reveal that the interaction between audit structure and auditor locus of control is significant. Thus, employee intentions on remaining with the current employer is dependent on the match between audit structure and auditor locus of control.; Examination of employment offers given to interviewing students reveals no significant emphasis given to an interviewee's locus of control during the hiring process. Offers were given almost equally to internals and externals interviewing with the participating firms.