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An International Meeting of American Accounting
Association
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Mergers and operational efficiency change in Taiwan’s CPA firms |
Tsung - Yi Tsai
National Yunlin University of Science and Technology and Lecturer at Shin Chien University
Chung - Cheng Yang
National Yunlin University of Science and Technology
Yahn - Shir Chen
National Yunlin University of Science and Technology Taiwan R.O.C.
Abstract: The Translog cost function model is specified to analyze the relation between CPA firms’ mergers and operational efficiency in Taiwan. Estimation of the model uses a balanced panel of data for 120 CPA firms for the period 1997-2001. The survey data are collected from the "Census Report of CPA firms in Taiwan" done by Department of Statistics, Ministry of Finance, ROC. DEA is applied to assess cost efficiency, technical efficiency, as well as allocative efficiency of CPA firms, and Tobit censored regression model to examine the relation between operational efficiency and CPA firms’ mergers. The empirical result indicates that scale economies are prevalent in public accounting industry. In addition, mergers of scale economies effects are larger than cost effects, justifying recent M&A activities among public accounting industry.