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1 – 10 of over 112000Magdy 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.
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.
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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.
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.
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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.
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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…
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.
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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…
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.
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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…
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.
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Georg Josef Loscher and Stephan Kaiser
This study aims to explore how commercial and professional management instruments are combined in accounting firms.
Abstract
Purpose
This study aims to explore how commercial and professional management instruments are combined in accounting firms.
Design/methodology/approach
The authors conducted a qualitative study based on 30 semi-structured interviews with partners from 30 different accounting firms (sole practitioners to Big Four) in Germany. The study mainly draws from the literature on the management of accounting firms.
Findings
The findings of this study indicate that professional and commercial management instruments structure the use of time by accountants. In these management instruments, professional and commercial goals are interwoven by three mechanisms revealed in this study and named as ambivalence, assimilation and integration. The authors further identify the managerial aspects of professional instruments.
Originality/value
This paper offers three mechanisms that combine commercial and professional goals in the management of accounting firms. The authors thereby contribute to the literature on the management of accounting firms by analysing these mechanisms that enable the pursuit of both goals simultaneously. Further, the authors argue that the minimum organisation, defined by regulators, of accounting firms is an essential infrastructure for the commercialisation of accounting.
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The purpose of this paper is to report on a study that investigated the feasibility of a women-only professional accounting firm in the city of Al Ain in the United Arab Emirates…
Abstract
Purpose
The purpose of this paper is to report on a study that investigated the feasibility of a women-only professional accounting firm in the city of Al Ain in the United Arab Emirates (UAE) that could help reduce female graduate unemployment in the city. Practically, the study sought to find out if, and under what conditions, a women-only professional accounting firm in Al Ain might be useful in providing employment for women in professional accountancy and facilitating the entry of female graduates into the job market by providing them with professional training. Theoretically, the study sought to add to the literature on positive discrimination to help women’s job prospects.
Design/methodology/approach
The study followed a qualitative research approach. It sought to show some specific connections between various professional, cultural, and economic factors by crystallising them through a hypothetical, innovative solution to the problem of local female unemployment, namely, a women-only professional accounting firm in a location of limited employment opportunities. It did so by investigating the views of male and female accounting graduates and other stakeholders.
Findings
The main finding is that the model women-only professional accounting firm could be used to overcome family objections to female graduate employment by removing the requirement that women work a long distance away from their families. The study also showed the deep cultural entrenchment of gendered stereotypes of female professionals.
Research limitations/implications
The study could have had a larger sample size with the survey, but it is important to note that this was not the focus of the study. However, the strength of the paper is in the qualitative aspect of canvassing views from various stakeholders.
Practical implications
The study brought to light key opportunities and challenges for policy makers who are seeking to address female graduate unemployment in economically remote locations.
Originality/value
The paper adds to the literature on positive discrimination for female job seekers in an adverse cultural and economic context.
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Abdulbaset Ab Klish, Moade Fawzi Shaker Shubita and Junjie Wu
Global interest in adopting the International Financial Reporting Standards (IFRS) has risen rapidly; however, the Middle Eastern and North African (MENA) countries have reacted…
Abstract
Purpose
Global interest in adopting the International Financial Reporting Standards (IFRS) has risen rapidly; however, the Middle Eastern and North African (MENA) countries have reacted differently towards the international diffusion. The purpose of this study is to examine the impact of the IFRS adoption/rejection decision on the quality of MENA region firms' financial reporting.
Design/methodology/approach
The quality of accounting is examined through five metrics models to measure earnings smoothing, managing earnings towards a target and timely loss recognition. The research sample consists of nine countries over a period of ten years (2006–2015), resulting in 3,040 firm-year observations in the main phase, and 2,580 firm-year observations in the additional analysis.
Findings
The findings reveal that the overall sample of IFRS adopters in the MENA region has benefited from the adoption of IFRS, as the results show that there is a reduction in earnings management for IFRS adopters in comparison to local standards adopters. The sub-sample analyses also reveal that firms that adopted IFRS, in both the rentier (oil-dependent states) and non-rentier states, have a higher financial reporting quality than non-IFRS adopters. However, the magnitude of the financial reporting quality was higher for IFRS adopters in rentier states.
Research limitations/implications
Similarly to previous research in this field, this study adopts a strict sample selection approach. Such an approach may limit the sample size, although the researchers have taken every possible step to ensure the use of an adequate sample size. The researchers acknowledge the strict period of ten years, despite having stated its rationale and importance of a more extended period to the quest of the paper.
Practical implications
This research provides valuable input by evaluating the current status of MENA region firms' financial reporting quality, based on their followed accounting regime. The implications of this paper result in better-informed decisions for investors as the information contents of the annual reports enhance comparisons that facilitate the further flow of investments. This research also provides significant insight into the International Accounting Standards Board (IASB). The findings of this study will assist the IASB in understanding the MENA region by measuring the consequences of the countries' decisions on the quality of firms' financial reporting.
Originality/value
The findings of this study contribute to the literature by revealing that countries with medium levels of governance quality have benefited the most from the IFRS adoption, while IFRS adopters in countries with stronger governance quality demonstrate lower financial reporting quality.
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Nor Farizal Mohammed, Kamran Ahmed and Xu-Dong Ji
The purpose of this paper is to examine the relationship between accounting conservatism, corporate governance and political connection in listed firms in Malaysia where political…
Abstract
Purpose
The purpose of this paper is to examine the relationship between accounting conservatism, corporate governance and political connection in listed firms in Malaysia where political influence plays a significant role in the capital market and in many business dealings.
Design/methodology/approach
By utilizing 824 firm-year observations comprising large listed companies over a period of four years from 2004, this study uses ordinary least squares regression models to investigate the relationship between accounting conservatism, corporate governance and political connections in Malaysia. Multiple measures of conservatism developed by Basu (1997) and Khan and Watts (2009) are employed.
Findings
The results show evidence of accounting conservatism (bad news being recognized earlier than good news) in Malaysia. Further, the results reveal that better corporate governance structure in terms of board independence is positively associated with accounting conservatism while management ownership is negatively associated with it. However, political connection has a negative moderating effect on the positive relationship between accounting conservatism and board independence. The results also suggest political connections have a positive association with firm’s future performance.
Originality/value
This study is the first in investigating the effect of political connections on accounting conservatism in Malaysian context and how political connections negatively affect the monitoring role of the corporate boards. By directly measuring political connection and controlling for various corporate governance mechanisms and firm-specific attributes, this study contributes to enhance the authors’ understanding of the political influence in financial reporting quality and firm performance in an emerging market setting.
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