Psychological capital, moral courage and internal audit effectiveness (IAE): a complementary or substitution effect

Imen Khelil

Managerial Auditing Journal, 2022, vol. 38, issue 4, 419-446

Abstract: Purpose - This paper aims to examine the impact of two psychological drivers, namely, psychological capital (PsyCap) and moral courage on internal audit effectiveness (IAE) and whether there is a substitution effect or complementary role of these psychological factors on IAE in the Tunisian setting. Design/methodology/approach - IAE is measured using managers’ perceptions of the internal audit function based on 157 responses received from managers, while the remaining variables (including PsyCap and moral courage) are based on 157 internal auditors’ responses. Findings - Findings suggest that PsyCap has a positive and significant impact on IAE, while moral courage has an insignificant impact on the same variable. Accordingly, PsyCap and moral courage are not playing a complementary role in improving IAE, and PsyCap substitutes for moral courage in increasing IAE. A battery of checks using interaction terms between moral courage and PsyCap corroborate these findings. Originality/value - To the best of the author’s knowledge, this study fills one of the major research gaps in the auditing literature by emphasizing the role played by PsyCap in improving IAE. The findings may have policy implications for top firm management, especially when recruiting internal auditors who should enjoy efficacy, hope, resilience and optimism to help the organization achieve its strategic objectives and increase its performance.

Keywords: Psychological capital; moral courage; Internal audit effectiveness (IAE) (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:maj-01-2022-3429

DOI: 10.1108/MAJ-01-2022-3429

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