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Article
Publication date: 31 August 2012

Magdy S. Farag and Rafik Z. Elias

The purpose of this study is to examine the impact of public accounting firms' mix of service revenue on their average productivity measured by total revenue per partner.

2065

Abstract

Purpose

The purpose of this study is to examine the impact of public accounting firms' mix of service revenue on their average productivity measured by total revenue per partner.

Design/methodology/approach

Using data from Public Accounting Report on top public accounting firms by revenue, an OLS regression model is applied by regressing revenue per partner on the percentage of revenue generated from auditing and attest, tax, management consulting, and other services independently.

Findings

Results show that the proportion of auditing and attest service revenue is negatively associated with public accounting firms' productivity. However, the proportion of other services revenue, other than tax and management consulting services, is positively associated with productivity. Additional investigation shows that if public accounting firms provide other services in their mix of services, then tax and management consulting services do not contribute to these public accounting firms' productivity.

Research limitations/implications

Results of this study cannot be generalized beyond the top 100 public accounting firms, and the measurement of revenue per partner ignores the exact number of partners within different service areas.

Practical implications

Although auditing and attest services are considered core services of public accounting firms, they do not increase the productivity of the firm.

Originality/value

This study helps in assessing whether average productivity of public accounting firms is affected by the proportion of a specific type of service in the post‐SOX era.

Details

Managerial Auditing Journal, vol. 27 no. 8
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 June 2005

Venkataraman M. Iyer, K. Raghunandan and Dasaratha V. Rama

To examine if there are systematic gender‐based differences in the perceptions of accounting firm alumni about their experiences with accounting firms.

1760

Abstract

Purpose

To examine if there are systematic gender‐based differences in the perceptions of accounting firm alumni about their experiences with accounting firms.

Design/methodology/approach

Alumni of Big 4 firms' offices in two large cities in the USA are surveyed. The analysis is based on responses from 110 alumni who had left the firm within the previous ten years.

Findings

Results indicate that women are less likely than men to believe that their former accounting firms developed their abilities to think and express themselves; helped them learn to manage others; and trained them for their present job. Further, women rated the training, personnel evaluation, and counseling programs at their former accounting firms lower than did men. Women were less likely to recommend their former firm to friends and acquaintances, and less likely to inform the former accounting firm about opportunities or pitfalls.

Research limitations/implications

Limitations associated with survey research such as non‐response bias must be taken into account.

Practical implications

The results suggest that more efforts are needed to bridge the gender gap in the public accounting profession.

Originality/value

This study is one of the few that have examined alumni's perceptions about their former firm.

Details

Managerial Auditing Journal, vol. 20 no. 5
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 6 January 2006

Mazni Abdullah and Zamzulaila Zakaria

This study is conducted to identify which attributes that are considered important by accounting students of University of Malaya and International Islamic University of Malaysia…

Abstract

This study is conducted to identify which attributes that are considered important by accounting students of University of Malaya and International Islamic University of Malaysia in the job selection process. The questionnaires which lists the attributes of public accounting firms are distributed to the accounting students and they were asked to rate each attribute on a 5 point Likert scale. The students’ demographic profile and their academic achievements (CGPA) are also analysed to determine their relationships with the preference in the subjects’ job selection. It is found that the students rank opportunity and advancement as the most important attributes followed by office atmosphere/friendliness of staff and firms’ training programme. The findings from this study might assist public accounting firms in developing policies that might attract more quality recruits. They can also be used by institutions of higher learning to give more appropriate career advice to students who are seeking for their first accounting job.

Details

Journal of Financial Reporting and Accounting, vol. 4 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 1 July 2004

Steven C. Hall and Laurie S. Swinney

Prior research provides evidence that firms make accounting choices to avoid violation of debt covenant provisions and the resulting costs of technical default. We extend this…

1219

Abstract

Prior research provides evidence that firms make accounting choices to avoid violation of debt covenant provisions and the resulting costs of technical default. We extend this research by asking why some firms refrain from making accounting policy changes when faced with costs of technical default. We considered two possible explanations. First, we hypothesise that these defaulting firms may lack the flexibility to make accounting changes. Second, we hypothesise that these defaulting firms may lack incentive to change accounting methods. Results confirm prior research and indicate that defaulting firms make more accounting changes than non‐defaulting firms. The decision by defaulting firms to change or not change accounting methods during the three years ending in the year of a technical default of debt covenants can be explained in part by the ability of the firm and by the incentives of the firm to make a change.

Details

Management Research News, vol. 27 no. 7
Type: Research Article
ISSN: 0140-9174

Keywords

Article
Publication date: 1 April 2005

Christie L. Comunale and Thomas R. Sexton

To explore the effects of mandatory auditor rotation and retention on the long‐term market shares of the accounting firms that audit the members of the Standard and Poor's (S&P…

3667

Abstract

Purpose

To explore the effects of mandatory auditor rotation and retention on the long‐term market shares of the accounting firms that audit the members of the Standard and Poor's (S&P) 500.

Design/methodology/approach

A Markov model is constructed that depicts the movements of S&P 500 firms in the period 1995 to 1999 among Big 5 accounting firms. Auditor rotation and retention are reflected in the transition probabilities. The impacts of mandatory auditor rotation and retention policies are evaluated by examining the state probabilities after two, five, and nine years.

Findings

The paper finds that mandatory auditor rotation will have substantial effects on long‐term market shares, whereas mandatory auditor retention will have very small effects. It shows that a firm's ability to attract new clients, as opposed to retaining current clients, will be the primary factor in determining the firm's long‐term market share under mandatory auditor rotation.

Research limitations/implications

The paper assumes that S&P 500 firms will continue their reliance on Big 5 firms and that the estimated transition probabilities will remain stable over time.

Practical implications

Excessive market share concentration resulting from such policies should not be a concern of regulators. The paper conjectures that, under mandatory rotation, accounting firms will reallocate resources to attract new clients rather than retain existing clients. This may result in lower audit quality.

Originality/value

Interestingly, over the past 25 years, several bodies have considered mandatory auditor rotation and retention. Surprisingly, the authors have found no studies of the effects of mandatory auditor rotation and retention on audit market share.

Details

Managerial Auditing Journal, vol. 20 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 12 February 2024

Anas Ghazalat and Said AlHallaq

This study aims to investigate the effect of accounting conservatism and business strategies as mitigating tools for bankruptcy risk. It determines the association among these…

Abstract

Purpose

This study aims to investigate the effect of accounting conservatism and business strategies as mitigating tools for bankruptcy risk. It determines the association among these factors and provides insights into the effectiveness of accounting discretion and business strategies in decision-making.

Design/methodology/approach

The study uses a sample of 83 nonfinancial listed firms in ASE for the period from 2013 to 2019. Bankruptcy risk is measured using the Altman Z-score (1968). Accounting conservatism is measured using the accrual-based approach, and optimal business strategies are identified through cluster analysis.

Findings

The results indicate that accounting conservatism has a significant negative effect on bankruptcy risk. Increased application of accounting conservatism practices leads to a decrease in the level of bankruptcy risk. However, the type of business strategy adopted by firms does not have a significant impact on bankruptcy risk, suggesting that firms are not effectively implementing their strategies to mitigate this risk.

Research limitations/implications

This study focuses on nonfinancial listed firms in the ASE, limiting the generalizability of the findings to other contexts. The study's findings contribute to the understanding of the role of accounting conservatism in reducing bankruptcy risk but highlight the need for further research on the effectiveness of business strategies in mitigating this risk.

Originality/value

This study lies in understanding of the role of accounting discretion in financial evaluations and emphasizes the importance of accounting conservatism as a tool for mitigating bankruptcy risk. The study's insights provide valuable guidance to practitioners, regulators and researchers in this field.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Book part
Publication date: 17 December 2005

Patricia H. Thornton, Candace Jones and Kenneth Kury

We contribute to the literature on institutional and organizational change by integrating two related areas of study: the theory and methods of analysis informed by the research…

Abstract

We contribute to the literature on institutional and organizational change by integrating two related areas of study: the theory and methods of analysis informed by the research on institutional logics and historical-event sequencing. Institutional logics provide the theory to understand how the content of culture influences organizational change; historical-event sequencing reveals the underlying patterns of cultural transformation. We apply this dual perspective to the cases of institutional stability and change in organizational governance in three industries: accounting, architecture, and higher-education publishing. Research on governance has focused on changes in organizational design between markets, hierarchies, and networks. Missing from this research is an understanding of how institutions at the wider societal level motivate organizations to adopt one of these governance forms over another. We examine how the governance of firms in these industries has been influenced by the institutional logics of the professions, the market, the state, and the corporation by focusing on three mechanisms – institutional entrepreneurs, structural overlap, and historical-event sequencing. Overall, our findings reveal how accounting was influenced by state regulation producing a punctuated equilibrium model, architecture by professional duality producing a cyclical model, and publishing by market rationalization producing an evolutionary model of institutional change in organizational governance.

Details

Transformation in Cultural Industries
Type: Book
ISBN: 978-1-84950-365-5

Book part
Publication date: 26 June 2006

Namrata Malhotra, Timothy Morris and C.R. (Bob) Hinings

This chapter examines the sources of variation in organizational form among accounting and law firms. We first summarize research in the organization of professional service firms

Abstract

This chapter examines the sources of variation in organizational form among accounting and law firms. We first summarize research in the organization of professional service firms and explain its evolution. This is followed by the argument that variations around the P2 archetype have emerged in response to different market and institutional pressures faced by accounting and law firms. Drawing on contingency and institutional theory, we show how the changing balance between the influence of market and institutional factors has resulted in structural variation.

Details

Professional Service Firms
Type: Book
ISBN: 978-0-76231-302-0

Article
Publication date: 1 August 2005

Ronald McGaughey, Victor Puleo and K. Michael Casey

The purpose of this research paper is to provide practitioners and researchers with guidance and ideas for benchmarking employee benefits in companies providing professional…

2556

Abstract

Purpose

The purpose of this research paper is to provide practitioners and researchers with guidance and ideas for benchmarking employee benefits in companies providing professional services. The research addressed employee benefits in multi‐owner accounting firms.

Design/methodology/approach

Data from a survey of a large number of multi‐owner accounting firms (CPA firms) were analyzed to examine professional employee benefits and to look at the relationship between firm size and benefits offered.

Findings

An analysis of survey results suggested that larger firms offer better benefits than smaller firms. Larger firms tend also to be more profitable. Various employee benefit metrics were examined.

Research limitations/implications

The survey was limited to accounting firms in the United States, so the findings may have limited value for researchers and practitioners in other countries.

Practical implications

The better benefits offered by larger accounting firms may allow them to attract better personnel, possibly accounting for their greater profitability. If this is indeed true, then a good benefit package may well be a key success factor for accounting firms, and possibly for other professional services. Firms seeking to improve their competitive position may, therefore, find it advantageous to benchmark their professional employee benefits against the benefit packages of larger more profitable competitors.

Originality/value

This paper examines professional employee benefits in multi‐owner accounting firms and identifies metrics that could be useful to practitioners in benchmarking those benefits. The metrics identified and other findings may provide practitioners with ideas for benchmarking benefits in other professional service organizations.

Details

Benchmarking: An International Journal, vol. 12 no. 4
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 13 September 2022

Shungen Luo and Fei Song

This study tests the effect of accounting standards precision on financial restatements and the influence of accounting standards precision on different types of restatements…

Abstract

Purpose

This study tests the effect of accounting standards precision on financial restatements and the influence of accounting standards precision on different types of restatements (including errors and irregularities). What is more, the heterogeneity between accounting standards precision and financial restatements is verified in this paper. In the further analyses, the authors also examine the mediating roles and moderating roles on the correlation between accounting standards precision and financial restatements.

Design/methodology/approach

The focus is placed on an unbalanced panel of 18,766 samples over the period of 2007–2017.

Findings

The authors find that firms' restatements decrease when standards are more principles-based (low accounting standards precision). Especially, irregularities significantly decrease when firms' standards are more principles-based. What's more, the negative relationship between principles-based standards and restatements is more significant in “big four” accounting firms. Moreover, from the mediating effect results, the authors find that low accounting standards precision decreases a firm's financial reporting complexity and increases equity restriction, which in turn can help decreasing its financial misreporting. From the moderating effect results, the authors find that the higher the TOP1 and the more analysts following the firm, the higher the benefit of accounting standards precision to misstatements.

Originality/value

The results of this study provide a theoretical reference for accounting standard setters and are helpful to inform investors and regulators about the influence of Chinese accounting standards on restatements.

Details

Asian Review of Accounting, vol. 30 no. 4
Type: Research Article
ISSN: 1321-7348

Keywords

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