Abstract
This study examines the association between professional training, higher academic qualifications (educational levels) and operating performance of audit firms in Taiwan. We particularly focus on the curvilinear effects of higher academic qualifications on operating performance. We group the total sample into three categories: national, regional and local audit firms. Based on the theoretical framework in industrial economics, we establish a cross-sectional multiple regression equation to test our hypotheses. Both higher academic qualifications and professional training are positively related to the operating performance of audit firms. Professional training moderates the relation between higher academic qualifications and operating performance. Higher academic qualifications exhibit a curvilinear effect on operating performance with a reverse U-shaped relation for the national audit firms and a U-shaped relation for both regional and local audit firms. Due to data unavailability, some factors affecting the audit quality and operating performance are not included in our analysis, such as auditor teamwork, internal control system, operating policies and auditing procedures of audit firms. The findings that higher academic qualifications are positively associated with the operating performance of audit firms justify the educational policy of establishing institutes or graduate schools in accounting over the past two decades. Furthermore, audit firms skillfully exploit employees with higher academic qualifications to improve their operating performance. We are the first to document the moderating effects of professional training and the curvilinear association between higher academic qualifications and operating performance, contributing knowledge to related literature.
Highlights
Education of higher degree talents is relevant to a nation’s power and materially affects the political, economic, and cultural development of a country
As the third purpose of this study, we further examine the moderating effects of professional training on higher academic qualifications of auditors
The findings demonstrate different shapes of the curvilinear relation for audit firms in different market segments
Summary
Education of higher degree talents is relevant to a nation’s power and materially affects the political, economic, and cultural development of a country. The global village has tended to intensify drastic cross-border competition in business, trade, and politics, justifying the significance of higher academic qualifications/educational levels and attracting the attention of the government in highly developed countries on this issue. The United Kingdom issued a white paper in 1987 to enhance the implementation of higher education. Its 1988 Education Reform Act transformed the polytechnics and other higher education colleges into independent institutions. The 1992 Further and Higher Education Act approved the reorganization of many polytechnics as universities. The United Kingdom conducted a major reorganization and convergence in the pattern of higher education institutions [1,2,3]
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