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Productivity Growth, Human Capital, and Technical Efficiency
Yahn - Shir Chen,
National Yunlin University of Science and Technology
Chao - Ling Lin, National Yunlin University Of Science And Technology And Chang Jung Christian University
ABSTRACT. From the perspectives of structure-conduct-performance model and resource-based theory, this study employs the data envelopment analysis (DEA) and Malmquist productivity index to estimate the production performance of audit firms in Taiwan. Production performance assessed in this study includes productivity change, technical change, and technical efficiency change. In addition, effects of human capital embodied in partners on technical efficiency of audit firms are examined. A balanced panel of data from 45 public accounting firms is obtained from the 1996-2001 Census Report of Public Accounting Firms in Taiwan. Empirical results reveal that, on average, audit firms experienced a productivity growth of 27% and a technical progress of 31% but a 5% decline of relative efficiency during the sample period. We also report a positive relationship between technical efficiency of the firms and human capital embodied in partners.
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