The Operating Efficiency of Chinese CPA Firms: The Effect of Merger

Lin, H. L., and Cho, C. C. 2014. The Operating Efficiency of Chinese CPA Firms: The Effect of Merger. NTU Management Review, : 175-202. https://doi.org/10.6226/NTURM2014.DEC.R11005

Hsiao-Lun Lin, Assistant Professor, Department of Accountancy, National Taipei University
Chia-Ching Cho, Assistant Professor, Department of Accounting and Information Technology, National Chung Cheng University

Abstract

Developing larger and more competitive Chinese CPA firms is the objective of Chinese government. The Chinese government supports CPA firms to achieve scale growth through merger. This study examines the relationship between operational efficiency and the merging of CPA firms. We measure operating efficiency by applying Data Envelopment Analysis (DEA). Using revenue and human resource data in China for the 2004-2009 period, we find firms that are involved in mergers have significantly higher productivity growth than their peers. However, not all mergers have positive effects. Mergers occur between two (or more) CPA firms that are licensed to audit listed companies and mergers occur between two (or more) CPA firms that headquarter are in different provinces have significantly higher productivity growth. The findings of this study have policy implications for regulators in China and the Chinese CPA firms.  


Keywords

CPA firmsmergersData Envelopment Analysis


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