The post-SOX comparative dynamics of public accounting firm efficiency

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ephraim Clark ◽  
Zhuo Qiao
Keyword(s):  
Market Competition ◽  
Public Accounting ◽  
Accounting Firms ◽  
Firm Efficiency ◽  
Content Type ◽  
Accounting Firm ◽  
Comparative Dynamics ◽  
Catching Up ◽  
Big 4 ◽  
Public Accounting Firms

Purpose This paper aims to analyze the differences in the efficiency of public accounting firms across both firms and countries in the post-Sarbanes-Oxley world. It also investigates the issues surrounding the dynamics of their efficiency gaps. Design/methodology/approach This study uses four-stage data envelopment analysis to estimate the efficiency of public accounting firms in the USA, the UK and Canada over the period 2008–2015. The ß- and σ- convergence tests are applied to analyze the dynamics of the efficiency gaps across firms and countries. Findings The results show that market competition in the accounting sector increases efficiency. Gross domestic product growth also increases it while inflation decreases it. The analytical results indicate that the lagging public accounting firms are catching up to the leading public accounting firms within the same country, within the Big 4 group and within the non-Big 4 group. They also show that the non-Big 4 groups are catching up to the Big 4 group and that the countries with less efficient accounting firms are catching up to the country with the more efficient accounting firms. Originality/value This study accounts explicitly for the effect of business environmental factors on public accounting firm efficiency. Furthermore, the research also adds to the literature by investigating the comparative dynamics of the efficiency gaps of public accounting firms.

Quality moderates market competition: evidence of Taiwanese service industry

2016 ◽  
Vol 33 (9) ◽  
pp. 1332-1345 ◽  
Author(s):  
Yi-Fang Yang ◽  
Yahn-Shir Chen
Keyword(s):  
Service Quality ◽  
Professional Education ◽  
Market Competition ◽  
Market Concentration ◽  
Public Accounting ◽  
Accounting Firms ◽  
Content Type ◽  
Positive Effects ◽  
Audit Market ◽  
Public Accounting Firms

Purpose The purpose of this paper is to examine the direct and interactive effects of audit service quality and audit market concentration on performance of public accounting firms in Taiwan. Design/methodology/approach Empirical data of this study come from registered public accounting firms in Taiwan, an industrial data. From the perspective of industrial economics and based on the structure-conduct-performance paradigm (Cowling and Waterson, 1976), this study use OLS to test the linear regression equation. Findings Empirical results indicate that both audit service quality and audit market concentration have positive effects on performance. The interaction terms between audit service quality and audit market concentration are positively related to performance. Practical implications This documents that human capital is the core resource in public accounting firms which could enhance performance through higher audit service quality under intense market competition. Specifically, facing increasingly competitive audit market, public accounting firms response to the hostile situation by employing auditors with higher educational level, more work experience, with professional licenses, and taking more continuing professional education. Originality/value Few previous researches consider the effects of either market concentration or audit service quality on firm performance. This study simultaneously examines the relation among audit service quality, audit market concentration, and performance of public accounting firms. With the results, this study contributes knowledge to human resource and quality management-related literatures.

A Contemporary Analysis of Accounting Professionals' Work-Life Balance

2015 ◽  
Vol 30 (1) ◽  
pp. 41-62 ◽  
Author(s):  
Steve Buchheit ◽  
Derek W. Dalton ◽  
Nancy L. Harp ◽  
Carl W. Hollingsworth
Keyword(s):  
Organizational Support ◽  
Work Life ◽  
Work Life Balance ◽  
Public Accounting ◽  
Important Distinction ◽  
Life Balance ◽  
Accounting Firms ◽  
Accounting Professionals ◽  
Big 4 ◽  
Public Accounting Firms

SYNOPSIS In recent years, work-life balance surpassed compensation as the most important job satisfaction factor among AICPA members (American Institute of Certified Public Accountants [AICPA] 2004). Despite the continued importance of this issue in the accounting profession (AICPA 2011), prior research has not examined work-life balance perceptions across different segments of the profession. We survey 1,063 practicing CPAs in order to assess the comparative work-life balance perceptions across (1) Big 4 versus smaller public accounting firms, (2) audit versus tax functions, and (3) public accounting versus industry work contexts. Consistent with predictions based on institutional logics theory, we find that work-family conflict and job burnout perceptions (our proxies for work-life balance) are highest in the Big 4. We are the first study to measure both support-for and viability-of traditional alternative work arrangements (AWAs), and we report an important distinction between these two constructs. Specifically, while CPAs across all public accounting firms (i.e., Big 4, national, regional, and local firms) report similar levels of organizational support-for AWAs, Big 4 professionals report significantly lower perceived viability-of AWAs (i.e., the ability to use AWAs and remain effective at one's job) compared to accounting professionals at smaller public accounting firms. Further, we find no differences between audit and tax professionals' perceptions across any of our work-life balance measures. We also document nuanced differences regarding work-life balance perceptions in public accounting versus industry. For example, contrary to conventional wisdom, work-life balance is not uniformly “better” in industry (e.g., burnout is actually lower in smaller public accounting firms compared to industry). Finally, we use open-ended responses from a follow-up survey to provide several recommendations for firms to improve their work-life balance efforts.

scholarly journals The Influence of Reputation of Public Accounting Firms on the Integrity of Financial Statements with Corporate Governance as the Moderating Variable

2018 ◽  
Vol 9 (3) ◽  
pp. 177-186 ◽  
Author(s):  
Nera Marinda Machdar ◽  
Dade Nurdiniah
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Institutional Ownership ◽  
Financial Statements ◽  
Financial Statement ◽  
Public Accounting ◽  
Accounting Firms ◽  
Accounting Firm ◽  
The Public ◽  
Public Accounting Firms

This research aimed to determine the effect of the reputation of the public accounting firm on the integrity of financial statements by including leverage and firm size as the control variables. This research also investigated the effects of corporate governance moderation that was proxied by the independent commissioner, institutional ownership, and audit committee in strengthening or weakening the reputation of the public accounting firms on the integrity of the financial statements. The population was manufacturing companies listed on the Indonesia Stock Exchange (IDX) in 2013-2015. The sample utilized the purposive sampling method and resulted in 34 manufacturing firms, so the total observations were 102 firms in all observed years. This research performed statistical data processing with EVIEWS 8. There are two main findings of this research. First, the reputation of public accounting firm affects the integrity of the financial statement. Second, corporate governance that utilizes the independent commissioners and institutional ownership strengthen the effect of the reputation of the public accounting firm on the integrity of the financial statement. However, corporate governance using audit committee weakens the reputation of the public accounting firm on the integrity of financial statements.

Resilience as a coping strategy for reducing auditor turnover intentions

2020 ◽  
Vol 33 (3) ◽  
pp. 483-498
Author(s):  
Kenneth J. Smith ◽  
David J. Emerson ◽  
Charles R. Boster ◽  
George S. Everly, Jr
Keyword(s):  
Job Satisfaction ◽  
Turnover Intentions ◽  
Role Stress ◽  
Structural Equations ◽  
Negative Association ◽  
Public Accounting ◽  
Accounting Firms ◽  
Content Type ◽  
Public Accounting Firms ◽  
Resilience Training

Purpose The purpose of this paper is to examine the potential counteracting influence of individual resilience levels on the tendency of role stressors, stress arousal and burnout to reduce job satisfaction and increase turnover intentions. Design/methodology/approach This study surveys 332 auditors from the offices of nine public accounting firms. The structural equations modeling procedures examine an expanded role stress model to assess the nature and extent of the role that resilience plays in reducing stress, burnout, job dissatisfaction and turnover intentions. Findings Resilience has a significant direct negative association with stress arousal and burnout, a significant indirect positive association with job satisfaction and a significant indirect negative association with turnover intentions. Research limitations/implications As a cross-sectional study that incorporates self-report instruments, no definitive statements can be made about causality. However, the results extend the extant knowledge related of the role of resilience as a coping mechanism within the role stress paradigm in auditor work settings. Practical implications This study’s findings suggest the potential value of resilience training programs at public accounting firms to reduce staff burnout. In turn, reduced burnout has an increased likelihood ceteris paribus of increasing job satisfaction and reducing auditor turnover intentions. Originality/value This study’s findings suggest that resilience training for public accounting staff to reduce burnout may provide the organizational and personal benefits associated with enhancing job satisfaction and decreasing turnover intentions.

CPAs' Perceptions of the Emerging Multidisciplinary Accounting/Legal Practice

2001 ◽  
Vol 15 (1) ◽  
pp. 35-48 ◽  
Author(s):  
Kimberly E. Frank ◽  
Randall K. Hanson ◽  
D. Jordan Lowe ◽  
James K. Smith
Keyword(s):  
Legal Services ◽  
Certified Public Accountant ◽  
Public Accounting ◽  
Legal Ethics ◽  
Accounting Firms ◽  
Accounting Firm ◽  
The Public ◽  
Multidisciplinary Practice ◽  
Public Accounting Firms ◽  
Public Accountant

This paper reports the results of a survey of 219 American Institute of Certified Public Accountant members about legal services their public accounting firms currently offer and plan to offer in the future, and how they would organize their firm to deliver these services to clients. The survey is motivated by the legal profession's current investigation of whether to allow nonattorneys to share fees and become partners with nonattorneys and by the American Bar Association's call for evidence on the current existence of multidisciplinary practice (MDP). Forty-four states established MDP committees to recommend whether legal ethics rules should be relaxed to allow MDP. Relaxed ethics rules allow public accounting firms to employ attorneys to offer a full array of legal services to their clients. We find that public accounting firms already offer a number of legal services to their clients and are interested in increasing the offering of these services if allowed. The results also indicate that the size of the public accounting firm is likely to influence the types of legal services offered and the arrangements used to deliver the legal services to clients. The findings are important because they highlight the need for the legal and accounting professions to formulate rules regarding MDP.

The Colonization of Public Accounting Firms by Marketing Expertise: Processes and Consequences

2017 ◽  
Vol 37 (1) ◽  
pp. 191-213 ◽  
Author(s):  
Claire-France Picard ◽  
Sylvain Durocher ◽  
Yves Gendron
Keyword(s):  
Auditor Independence ◽  
Marketing Strategies ◽  
Public Accounting ◽  
Accounting Firms ◽  
Accounting Firm ◽  
Documentary Analysis ◽  
Public Accounting Firms ◽  
Part Time ◽  
Public Accountants ◽  
Using Data

SUMMARY This paper highlights the colonization of public accounting firms by marketing expertise. Using data collected through interviews with auditors and marketing experts, complemented with data generated through documentary analysis, we examine the marketing-oriented transformations that took place in public accounting firms and the important outcomes ensuing from the spread of marketing ideology to the field of auditing. To carry out this work, we developed a customized conceptual framework aimed at enriching our understanding of the “marketization” of public accounting. Empirically, we document the development of various marketing strategies and the underlying translations of public accounting firm day-to-day activities (in terms of business relationships and technical advice) into marketing language. Our findings point to the transformation of public accountants to “part-time” marketers. The results are also suggestive of the colonization of public accountants' minds, whose core values are being subjected to the influence of marketing expertise. This shift engenders important consequences, particularly in potentially compromising auditor independence.

An Investigation of Ethical Environments of CPAs: Public Accounting versus Industry

2016 ◽  
Vol 29 (1) ◽  
pp. 43-56 ◽  
Author(s):  
Donna D. Bobek ◽  
Derek W. Dalton ◽  
Brian E. Daugherty ◽  
Amy M. Hageman ◽  
Robin R. Radtke
Keyword(s):  
Ethical Decision ◽  
Ethical Decision Making ◽  
Data Availability ◽  
Certified Public Accountants ◽  
Public Accounting ◽  
Accounting Firms ◽  
Research And Practice ◽  
Work Settings ◽  
Big 4 ◽  
Public Accounting Firms

ABSTRACT The purpose of this paper is to investigate certified public accountants' (CPAs) perceptions of their ethical environments. More specifically, we compare the perceptions of CPAs in (1) public accounting firms to those in industry, and (2) perceptions of CPAs at Big 4 public accounting firms to those at non-Big 4 firms. The ethical environment is one component of overall organizational culture and is important for encouraging ethical decision making. Based on responses from 904 CPAs, we find CPAs working at public accounting firms perceive their ethical environments as significantly stronger than CPAs in industry (and other nonpublic accounting work settings). Additionally, within public accounting, CPAs at Big 4 firms perceive their ethical environments as significantly stronger than those working at non-Big 4 accounting firms. Implications for research and practice are discussed. Data Availability: Please contact the authors.

scholarly journals Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms

2017 ◽  
Vol 16 (4) ◽  
pp. 478-496 ◽  
Author(s):  
C. Janie Chang ◽  
Yan Luo ◽  
Linying Zhou
Keyword(s):  
Financial Statements ◽  
Professional Staff ◽  
Public Accounting ◽  
Firm Level ◽  
Accounting Firms ◽  
Content Type ◽  
Resource Information ◽  
Subsequent Period ◽  
Public Accounting Firms ◽  
The Impact

Purpose The purpose of this study is to examine the impact of workloads at public accounting firms on the likelihood of an audit deficiency being identified during a triennial inspection by the Public Company Accounting Oversight Board (PCAOB). Design/methodology/approach Using the human resource information disclosed in PCAOB inspection reports, this study constructs two firm-specific workload measures: the ratio of issuer clients to audit partners; and the ratio of issuer clients to professional staff. Firm-level audit deficiency is measured at three levels of severity: Do any of the audit engagements inspected by the PCAOB reveal an audit deficiency? Are any of the identified audit deficiencies directly related to the auditors’ failure to identify a departure from GAAP in the client’s financial statement? Are any of the identified audit deficiencies associated with a significant adjustment or restatement in the client’s subsequent period financial statements? This study uses logistic regression to examine the association between audit deficiency and the workload of public accounting firms. Findings The empirical evidence suggests that the workload of public accounting firms is positively associated with the likelihood of a deficient audit, auditor’s failure to identify client’s GAAP departure and/or an audit deficiency resulting in a significant adjustment or even a restatement of the client’s financial statements in the subsequent period. Originality/value This study is among the first to investigate the impact of firm workload on deficient audits.

Efficiency evaluation of accounting firm partnerships from the perspective of operating difficulties, strategies, and practices in Mainland China

2018 ◽  
Vol 25 (8) ◽  
pp. 2968-2996
Author(s):  
Chia-Chi Lee
Keyword(s):  
Regression Analysis ◽  
Core Competencies ◽  
Market Competition ◽  
Mainland China ◽  
Operating Efficiency ◽  
Accounting Firms ◽  
Content Type ◽  
Accounting Firm ◽  
Main Challenge ◽  
Percent Contribution

Purpose The purpose of this paper is to explore the operating efficiency of accounting firm partnerships. Design/methodology/approach An empirical analysis is performed with a three-stage research method: data envelopment analysis (DEA), univariate testing and regression analysis. Findings The results indicate that large firms are not necessarily the most efficient. Efficient accounting firms see an average 50 percent contribution from total practice revenues and a 50 percent contribution from the number of cases. The percentage of senior managers is higher for firms with poor operating efficiency than for firms with good operating efficiency. This implies that firms with poor operating efficiency have a higher expenditure in human capital. Both efficient and inefficient firms find intense market competition to be the main challenge, followed by the challenge of market recessions. Appropriate educational training should be provided to upgrade the professional expertise and competency of staff. Response to peer competition and assistance to local accountant practices are the main reasons for setting up practice in Mainland China. The main operating mode in Mainland China is bringing personnel from Taiwan. Originality/value Using DEA, univariate testing and regression analysis, this paper aims to help the operators of accounting firms in dealing with business difficulties, finding their own core competencies, and making up for their operating disadvantages. The findings can provide references to reviewing whether their human resource allocation is appropriate and which operational type should be adopted by the accounting firms. Hence, the accounting firms can formulate their future operational strategies.

The relationship between non-audit fees and audit quality: dealing with the endogeneity issue

2015 ◽  
Vol 25 (6) ◽  
pp. 777-795 ◽  
Author(s):  
Pedro Carmona ◽  
Alexandre Momparler ◽  
Carlos Lassala
Keyword(s):  
Audit Quality ◽  
Audit Fees ◽  
Listed Companies ◽  
Auditor Independence ◽  
Public Accounting ◽  
Accounting Firms ◽  
Content Type ◽  
Consulting Services ◽  
Public Accounting Firms ◽  
Abnormal Accruals

Purpose – The purpose of this paper is to explore whether the provision of non-audit services (NAS) by public accounting firms undermines audit quality. The study addresses this question by testing for an association between the provision of consulting services and auditor independence in listed companies. Design/methodology/approach – The authors study if the magnitude of non-audit fees explains variations in earnings management by looking at the joint determination of non-audit fees, audit fees, and abnormal accruals using the SURE-regression estimation method. Findings – Evidence from tested models suggests that audit services quality is uncompromised by the provision of NAS. In other words, high non-audit fees do not necessarily result in poor quality financial reporting. Research limitations/implications – A different research methodology and a different sample (e.g. non-listed companies) may lead to differing results. As the paper analyses only one country, generalizability of the results might be a limitation. There is no need to increase legal restrictions on the provision of consulting services by public accounting firms in order to better safeguard audit quality. Practical implications – Consulting clients may be more confident to hire both audit and NAS with the same firm and can make a case before the general Shareholders’ meeting. By providing both audit and NAS, consulting firms obtain knowledge spillovers and synergies while appealing highly qualified professionals. Originality/value – The use of simultaneous equations (SURE-regression) to establish the auditor-client relation allows us to better model theoretical relations between audit fees, non-audit fees, and abnormal accruals. Likewise, joint modeling takes account of correlations between the error terms of the individual models, yielding more efficient estimates than ordinary least squares. Performing this analysis in a non-Anglo-American country with low litigation risk is also a valuable contribution to extant literature.

Sign in / Sign up

Export Citation Format

Share Document