The association between cost-standard setting and work performance: The role of information asymmetry and goal complexity

Abstract

This paper is an empirical testing of the association between Cost Standard-Setting (PSS) on Work Performance (WP), mediated With Information Asymmetry (IA), and Goal Complexity (GC). It is a rule of thumb that PSS setting can lower the level of IA and GC between the managers and the employees and leads to better WP. The present work uses a path model to measure the direct, indirect, and spurious effect between the dependent and independent variables of this study. Data were collected from ten corporate firms in Iraq via a pre-designed questionnaire survey, the questionnaire forms were distributed randomly to the firm’s top management personnel, departmental managers, engineers, accountants, and administrators who are involved in PSS. Around 350 forms were distributed for data collection, however, only 198 forms were considered for this analysis, the rest of the forms were discarded due to incompleteness or missing values. The findings of the study showed a significant direct effect of PSS on WP. Likewise, there was clear evidence of an indirect effect via the mediating variables (IA and GC). The influence of IA and GC confirms the strong association between the independent variable (PSS) on the dependent variable (WP).