The association between continuing professional education and financial performance of public accounting firms
ABSTRACT This study investigates the relationship between continuing professional education (CPE), a mechanism of professional training, and financial performance of public accounting firms. Both training subject (partner and assistant) and training location (internal and external) are included. Public accounting firms are categorized as big, medium, and small-sized ones. Empirical data are obtained from the 1992–1995 Survey Report of Public Accounting Firms in Taiwan, published by the Financial Supervisory Commission, Executive Yuan, Taiwan, ROC. Univariate test and multiple-regression model are employed to examine the financial performance effects of CPE. Main results indicate that both professional training of assistants and external professional training are positively related to financial performance in big-sized firms. Next, we document a significantly positive association between internal training of assistants and financial performance in either big-, medium-, or small-sized firms. Finally, both external professional training of partners in big-sized firms and external professional training of assistants in small-sized firms are positively related to financial performance. Few prior studies investigate professional training of public accounting firms by a regression model due to availability of empirical data. Accordingly, evidences obtained in this study provide useful information to partners for decision-making in public accounting firms under the considerably competitive audit market.
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- "Third, a small-sized firm is defined as a proprietorship firm. Similar to Chen et al. (2008), total audit firms are partitioned into three categories in this study. First, large audit firms are defined to be the firms with three or more partners and offering audit services to public companies. "
ABSTRACT: This paper extracts auditor quality from human capital (education, experience, certificate, training, and effort) and decomposes auditor size into three levels (large, medium, and small) to investigate whether there is a positive relationship between auditor size and auditor quality and to examine whether there is a premium between auditor quality and auditor fees. First, the positive relationship between auditor size and auditor quality of large audit firms is higher than that of small audit firms, but there is no difference between medium and small audit firms. Second, the positive relationship between auditor quality and auditor fees of large audit firms is higher than that of small audit firms, but there is no difference between medium and small audit firms. Overall, our empirical results support that auditor size as a proxy in measuring auditor quality and echo that large audit firms with higher auditor quality have auditor fee premiums.SSRN Electronic Journal 01/2009; DOI:10.2139/ssrn.1325049
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ABSTRACT: Purpose – Following the high profile collapses of Enron and WorldCom, and the demise of Andersen, human capital (HC) has become a key driver of auditor quality. The purpose of this study is to investigate if there is a positive association between HC and auditor quality in public accounting firms and if the extent of association varies between accounting firms. Design/methodology/approach – Multiple regression and logistic modeling are applied to examine the association between auditor quality and HC. The sample consists of 4,865 firm-year observations over the period from 1989 to 2004. Findings – The main findings indicate that higher investments in HC correspond to a higher level of auditor quality. Furthermore, the power of HC on auditor quality has a significant difference between public and non-public audit market firms. Research limitations/implications – A number of theoretical and measurement limitations are acknowledged that could further increase the statistical power of the tests. Practical implications – The findings should be of interest to regulators, auditors, audit clients, and academics. The findings also suggest that HC has an impact on overall auditor quality. The audit firms need more well-educated and well-trained professionals with the experience to keep pace with the changing nature of the market and to perform audit tasks. Originality/value – The findings fill a gap in the literature regarding auditor quality and HC from the perspective of public accounting firms.Managerial Auditing Journal 06/2009; 24(July):523-541. DOI:10.1108/02686900910966512
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ABSTRACT: This study uses the data envelopment analysis (DEA) to evaluate the operational efficiency of 173 medium-sized audit firms in 2005. The empirical result indicates that there are 24 audit firms with the overall technical efficiency value of 1. In terms of overall technical efficiency, pure technical efficiency and scale efficiency, the result shows that the average scale efficiency of all samples is higher than the average pure technical efficiency. Besides, 55 firms of 173 audit firms are in the stage of constant returns to scale, 18 firms are in the stage of increasing returns to scale, 100 of them are in the stage of decreasing returns to scale. Thus, most of medium-sized audit firms are in the stage of decreasing returns to scale. In addition, this paper finds that the larger the scale, the higher the above three efficiency values. The audit firms with higher business revenues have better operational efficiency. The overall technical efficiency and sale efficiency of the audit firms with branches are significantly higher than those without branches. The audit firms with larger number of employees and partners, they perform significantly better overall technical efficiency and sale efficiency. Finally, the audit firms with higher total expenditures also have significantly higher operational efficiency.Expert Systems with Applications 10/2009; 36(8):11156-11171. DOI:10.1016/j.eswa.2009.02.092 · 2.24 Impact Factor