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Productivity Growth in Public Accounting Industry: The Role of Information Technology and Human Capital
Hsihui Chang, Drexel University
Jengfang Chen, National Cheng Kung University
Rong - Ruey Duh, National Taiwan University
Shu - Hsing Li, National Taiwan University
ABSTRACT. In this paper, we decompose productivity growth into four components: efficiency change, technical progress, information technology (IT) capital accumulation, and human capital accumulation. Analyzing operations data on 52 accounting firms in Taiwan for the years of 1993 and 2002, we find that accounting firms on average experience about 79 percent increase in their productivity over the ten-year period. This productivity growth is driven primarily by IT and human capital accumulation. We also find that the difference in productivity growth between Big 5 and non-Big 5 is attributable to technical progress and, especially, IT capital accumulation. Further, our results indicate that accounting firms that have high growth in NAS during the ten-year period experience significantly higher productivity growth, IT capital accumulation, and human capital accumulation than other firms that focus on traditional audit services.
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